Human Capital Implications
Of Future Economic Growth
In Cambodia:
Elements of a Suggested Roadmap
Discussion Paper No. 8
August 2011
© 2011, UNDP Cambodia
Human Capital Implications of Future Economic Growth in Cambodia: Elements of a Suggested Roadmap
DISCLAIMER
The responsibility for opinions in this publication rests solely with the authors. Publication does not constitute an endorsement by the
United Nations Development Programme or the institutions of the United Nations system.
Human Capital Implications
Of Future Economic Growth
In Cambodia:
Elements of a Suggested Roadmap
UNDP Funded Discussion Paper No. 8
In cooperation with
Supreme National Economic Council
TITLE
Human Capital Implications of Future Economic Growth in Cambodia
TABLE OF CONTENTS
ACRONYMS AND ABBREVIATIONS.....................................................................................................v
FOREWORD.................................................................................................................................................1
ACKNOWLEDGEMENTS..........................................................................................................................3
EXECUTIVE SUMMARY ...........................................................................................................................5
I. HUMAN CAPITAL AND ECONOMIC GROWTH.................................................................... 13
1.1Introduction........................................................................................................................... 13
1.2Human capital, knowledge economy and economic growth:
The shifting paradigm........................................................................................................ 14
1.3Elements of the knowledge economy.......................................................................... 19
1.4Human capital, economic diversification
and economic recovery in Cambodia........................................................................... 21
1.5Organisation of chapters within this report............................................................... 22
II. HUMAN CAPITAL IN CAMBODIA TODAY.............................................................................. 25
2.1Demography.......................................................................................................................... 26
2.2Migration................................................................................................................................. 28
2.3School attendance, repetition, and drop-out rates................................................. 29
2.4Quality and levels of education and training............................................................. 32
2.5Employment trends............................................................................................................. 34
2.6Mismatch between education and employment..................................................... 41
2.7Universities and technical and vocational education and training
in Cambodia........................................................................................................................... 43
2.8Regional variations.............................................................................................................. 45
2.9Current and future challenges......................................................................................... 46
III. INDUSTRIAL DIVERSIFICATION AND HUMAN CAPITAL DEFICITS................................ 49
3.1Background............................................................................................................................ 49
3.2Addressing the skills gap................................................................................................... 50
3.3Overview of the workforce in Cambodia..................................................................... 52
3.4Current interventions to fill the knowledge and skill gaps
among workers in Cambodia........................................................................................... 64
Cover photos:
Top left: © UNDP Cambodia
Second from top left: © UNDP Cambodia
Third from top left: © UNDP Cambodia/Arantxa Cedillo
Bottom left: © UNDP Cambodia/Isabelle Lesser
Right: © UNDP Cambodia
UNDP Discussion Paper No. 8
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Human Capital Implications of Future Economic Growth in Cambodia
IV. HUMAN CAPITAL IN GOVERNMENT AND THE NON-BUSINESS SECTORS
IN CAMBODIA................................................................................................................................ 67
4.1Introduction........................................................................................................................... 67
4.2Competitiveness, economic growth and the state of development . .............. 68
4.3The state and the creation of a knowledge economy............................................ 70
4.4Current realities and challenges to human capital development
for the Government............................................................................................................. 72
4.5The role of human development in Cambodian human capital investment.76
4.6Human capital and state-civil society interactions.................................................. 78
4.7Conclusion.............................................................................................................................. 80
V.
ELEMENTS OF A CONSOLIDATED ROADMAP
FOR HUMAN CAPITAL IN CAMBODIA................................................................................... 83
5.1Is there a Human Capital Development Roadmap for Cambodia?.................... 83
5.2Government initiatives (existing Government programmes).............................. 83
5.3Private sector and government-private sector initiatives..................................... 88
5.4Initiatives of international agencies and donors...................................................... 91
VI: A HUMAN CAPITAL DEVELOPMENT ROADMAP FOR CAMBODIA,
AND REASONS FOR OPTIMISM............................................................................................... 97
6.1Short-term interventions................................................................................................... 97
6.2Short to long-term interventions:................................................................................102
6.3Long-term interventions.................................................................................................104
6.4Cambodian Human Capital Development Roadmap...........................................107
REFERENCES..........................................................................................................................................113
ANNEXES................................................................................................................................................123
ENDNOTES.............................................................................................................................................163
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UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
FIGURES
Figure 1.1
Figure 2.1
Figure 2.2
Figure 2.3
Figure 2.4
Figure 2.5
Figure 2.6
Figure 2.7
Figure 2.8
Figure 2.9
Figure 2.10
Figure 2.11
Figure 2.12
Figure 2.13
Figure 2.14
Figure 2.15
Figure 2.16
Figure 3.1
Figure 3.2
Figure 3.3
Figure 3.4
Figure 3.5
Figure 3.6
Figure 3.7
Figure 4.1
Figure 4.2
Typical division of labour in global production networks..........................16
Dependency ratio of Cambodia (selected years),
percentage of total population............................................................................27
Population pyramids of Cambodia.....................................................................27
Projected labour force growth in Cambodia 2007-2015 (%).....................27
Percentage of people moving during three time periods..........................28
Primary and lower secondary net enrolment ratio
by province 2009-10.................................................................................................30
Youth out-of-school status and education (2007).........................................31
Repeaters in secondary school (all grades total)............................................31
Educational attainment of the adult population, 2004 and 2007............33
Net enrolment ratio (%)...........................................................................................33
Decomposition of GDP growth, 2001-2008.....................................................34
Labour force participation rate, for workers aged 15 and older (%).......34
Proportion of vulnerable employment within all employment...............40
Output per worker, by selected ASEAN countries, 2008.............................40
Education makes little difference to earnings,
except for the richest group..................................................................................42
Location of universities in Cambodia.................................................................43
Returns to age and education in East Asia, 2004...........................................47
Methods of training needed in Cambodia to upgrade workers...............53
Skills mismatch between employers demands and training,
according to employers (2009).............................................................................52
Employment generation across sectors, 2001-2008.....................................53
Skills employers find lacking in most employees in Cambodia................54
Major gaps in skills in the garment sector in Cambodia.............................56
Major gaps in skills in the hospitality sector in Cambodia.........................59
ICT in Cambodia compared to other ASEAN countries ..............................63
Universities under supervision of ministries....................................................73
Economic inequality in selected Asian countries..........................................77
TABLES
Table 2.1
Table 2.2
Table 2.3
Table 2.4
Table 2.5
Table 2.6
Table 2.7
Table 2.8
Age-specific five year migration rates
by rural-urban residence and sex, 2004............................................................29
Net enrolment/attendance rates in primary, lower secondary, and
upper secondary school by geographical domain and sex (2007)..........30
Labour force and labour force participation rate (%)...................................36
Employment by completed educational level and sex................................37
Employment by sector, age and sex...................................................................39
Labour demand through investment projects, by sectors, 2008.............39
Labour productivity, by industry(value added per person
employed, in constant 2000 value).....................................................................40
Employment status of population aged 10+ years,
2004 and 2007 (percent).........................................................................................41
UNDP Discussion Paper No. 8
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TITLE
Human Capital Implications of Future Economic Growth in Cambodia
Table 2.9
Table 2.10
Table 2.11
Table 2.12
Table 2.13
Table 3.1
Table 4.1 Table 4.2
Table 4.3
Table 4.4
Table 4.5
Table 4.6
Table 5.1
Average earning by education level for youth (US$/month).....................42
Total enrolments by study disciplinein public and
private higher education institutions.................................................................44
Enrolment figures for higher education and TVET in Cambodia..............45
Gross enrolment ratio in primary, secondary
and tertiary education(comparison among ASEAN countries)................46
Reason for not attending school among persons 5-17 years of age
who are not attending school by sex, 2007 (percent)..................................47
Total number of people directly employed in the tourism sector...........58
Historical size of the civil service by source.....................................................68
Public spending as percentage of GDP
and Human Development Index.........................................................................69
Expenditure on R&D in selected countries, 2000 and 2007.......................71
Public educational expenditure on tertiary education as
% of total public education expenditure, 2000 and 2007...........................72
Cambodia’s predictive poverty rates by province
computed from Commune Database................................................................79
National poverty line by domain, 2004 and 2007
(in current Riel per capita per day)......................................................................79
Growth rates of industry by sector are shaping
what is being taught in vocational education in Cambodia......................88
BOXES
Box 2.1
Box 3.1
Box 4.1
Box 5.1
Box 5.2
Box 5.3
Box 5.4
Box 6.1
Box 6.2
Box 6.3
Box 6.4
iv
Stopping school drop-outs through cash transfers . ...................................32
Foreign direct investment and the volatility associated with it................57
Tackling Wicked Problems: A Public Policy Perspective..............................81
Education, human capital and GDP....................................................................84
Government-led human capital interventions in Korea ............................86
Distance learning opportunities..........................................................................89
Unfolding an economic renaissance in Asia....................................................90
The Education Maintenance Allowance*....................................................... 100
Social safety nets and supporting the unemployed.................................. 101
The nature of TVET and its contribution to building human capital
in the short- and long-term................................................................................ 105
To upgrade human capital in Cambodia, a long-term strategy
with short-term components is needed........................................................ 108
UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
ACRONYMS AND ABBREVIATIONS
ADB
ASEAN
CAS
CSES
DGTVET
ESDP II
EU
FDI
GDP
HEIs
ICT
IFC
ILO
MDGs
MEF
MIME
MoEYS
MoLVT
MoP
NEA
NIS
NSDP
NTB
OECD
PNPM
PPPs
PTBs
PTCs
RGC
SME
SNEC
SWAp
TVET
UNDAF
UOC
USAID
WTO
Asian Development Bank
Association of Southeast Asian Nations
Country Assistance Strategy
Cambodia Socio-Economic Survey
Directorate General of Technical and Vocational Education and Training
Education Sector Development Programme
European Union
Foreign direct investment
Gross domestic product
Higher education institutions
Information and communications technology
International Financial Corporation
International Labour Organization
Millennium Development Goals
Ministry of Economy and Finance
Ministry of Industry, Mines and Energy
Ministry of Education, Youth and Sport
Ministry of Labour and Vocational Training
Ministry of Planning
National Employment Agency
National Institute of Statistics
National Strategic Development Plan
National Training Board
Organisation for Economic Co-operation and Development
National Programme for Community Empowerment (Indonesia)
public-private partnerships
Provincial Training Boards
Provincial Training Centres
Royal Government of Cambodia
Small- and medium-sized enterprises
Supreme National Economic Council
Sector-wide approach
Technical and vocational education and training
United Nations Development Assistance Framework
Open University of Catalonia (Spain)
United States Agency for International Development
World Trade Organization
UNDP Discussion Paper No. 8
v
TITLE
Human Capital Implications of Future Economic Growth in Cambodia
FOREWORD
The global economic downturn gave everyone pause for thought, not least those
countries with economies that relied largely on European and American markets
for their exports. The resulting calls for economic diversification have provided an
opportunity for countries to reconsider their industrialisation policies and to look at
longer term means of sustaining their economic growth. Successful diversification
requires commitment and investments in both human capital and infrastructure.
“Successful
diversification
requires
commitment and
investments in
both
human capital
and
infrastructure.”
Cambodia’s economy grew at an astounding pace through the 1990s. Narrowly
concentrated on exports, however, the country was left vulnerable to external shocks.
As a result, it became very clear that in the future, resilient growth would be more
important than rapid growth.
The Royal Government of Cambodia (RGC) has taken advantage of this opportunity
to look more closely at the country’s economy and its vulnerabilities, and to plan for a
revived, more diverse, and more resilient economic future.
At the Fourth Cambodia Economic Forum in February 2011, H.E. Prime Minister Hun
Sen highlighted the need for Cambodia to modernise its economy by promoting
industrial development to achieve sustainable growth and take it to a higher stage of
development. The industrial development policy presented at the Forum is designed
to capture more valued added in the existing core sectors (agriculture, garments
and tourism); upgrade emerging industries with growth potential (furniture and
handicrafts, construction materials, household appliances, extractive industries); and
to identify areas of latent comparative advantage in software development, chemical
industry, renewable energy, and creative industries.
A comprehensive and coordinated industrial development strategy for Cambodia’s
future will need to include a human capital development strategy to prepare the
labour force for the opportunities that will come with growth. The roadmap outlined
in this report highlights the need for diversification and resilience, and the steps that
will make this a reality.
At present, there exists a significant gap between market demand and the skills
available, and existing educational institutions and curricula are often unresponsive to
market demands and the needs of the private sector. The process of building up high
quality human capital will take time, but with systematic and coordinated efforts from
all relevant institutions and Government Ministries, today’s youth can be prepared for
tomorrow’s challenges.
Strategically located at the heart of South-East Asia, Cambodia possesses a youthful
workforce that has the potential to drive the country’s transition from a least developed
country to a middle-income country. And with 300,000 individuals expected to enter
the labour force each year, human capital development, at all levels, represents a vital
investment in the country’s future.
UNDP Discussion Paper No. 8
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Human Capital Implications of Future Economic Growth in Cambodia
There are immediate steps that can be taken, but as this report outlines, there are also
short-, medium- and long-term steps that can be integrated along the path to human
capital development that will work together to create a more diverse and resilient
economy to benefit all of the people of Cambodia.
Reaffirming the importance of a human capital development policy for Cambodia,
the Prime Minister, in his Keynote address at the Fourth Cambodia Economic Forum,
stated that “The Royal Government will pay special attention to…strengthening and
increasing the efficiency of vocational and skill training, which are needed to improve
the competitiveness of Cambodia.”
UNDP is working to support the Royal Government and other development partners
in preparing for the next phase of Cambodia’s human development, and sustainable
and inclusive economic growth. UNDP’s work in the area of human capital is geared
toward responding to the needs of the private sector and supporting the RGC as it
works to expand and improve the country’s human capital, providing opportunities
for the more than 65 percent of the population that is under 30 years of age.
Setting out on this path, and aspiring to reach middle-income country status by 2020,
the Royal Government can build a stronger, more equitable and more prosperous
future for all of its citizens.
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UNDP Discussion Paper No. 8
UNDP Cambodia
August 2011
Human Capital Implications of Future Economic Growth in Cambodia
ACKNOWLEDGEMENTS
This study was undertaken by UNDP Cambodia in collaboration with the Supreme
National Economic Council (SNEC). The research was led by Dr. Satish Mishra of Strategic
Asia. Sincere gratitude is due to many other people who have also made substantial
and meaningful contributions to this study.
We would like to extend our gratitude to senior officials from the Supreme National
Economic Council for providing invaluable guidance: H.E. Seilava Ros, Deputy Secretary
General; H.E. Tep Phyorin, Head of Economic Policy and Analysis; and Mr. Sovuthea
Hay, Researcher.
Very special thanks are due to the International Labour Organization for their substantial
advice on the research process: Ms. Carmela Torres, Senior Skills and Employability
Specialist; Dr. Sukti Dasgupta, Senior Specialist on Employment and Labour Market
Policies; Mr. Tuomo Poutiainen, Chief Technical Advisor, ILO Better Factories Cambodia;
and Mr. Sophorn Tun, National Coordinator, ILO Cambodia.
We would like to especially thank the peer reviewers whose insights helped the draft
report significantly: Ms. Carmela Torres, Senior Skills and Employability Specialist;
Dr. Sukti Dasgupta, Senior Specialist on Employment and Labour Market Policies;
Ms. Sandra D’Amico, Managing Director, HR Inc.; Ms. Yumiko Yamamoto, Programme
Specialist, UNDP Regional Centre for Asia and the Pacific; and Mr. Radhika Lal, Policy
Specialist, UNDP International Policy Center for Inclusive Growth.
We would also like to express our gratitude to the following for their critical and insightful
comments and advice: Ms. Sun Lei, Education Programme Specialist, UNESCO; and Mr.
Nimol Soth, Education Technical Assistant, UNESCO.
For their direct and indirect involvement in the study, special thanksgo to the staff
at: the Ministry of Labour and Vocational Training (MoLVT); the Ministry of Education,
Youth and Sport; and the National Employment Agency. Without their support and
encouragement, this study would not have been possible.
The process of preparing and finalising the report was carried out by the UNDP
Linking Policy and Practice to Achieve MDG 1 project, under the overall direction and
supervision of Ms. Dinravy Khorn, Policy and Research Coordinator. Additional support
was provided by Ian Cummings, Raksa Pen, Pidor Chhay, Somalay Ung, Priscila Scalco,
Sovannara Lim, Flavia Di Marco, Utara Norng, Tomas Flores, Soheang Pak and Glenn
Kendal.
UNDP Discussion Paper No. 8
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Human Capital Implications of Future Economic Growth in Cambodia
EXECUTIVE SUMMARY
Cambodia: Human Capital Development for a Future Diversified Economy
Cambodian Human Capital in Light of the Recent Global Economic Crisis
1. Cambodia is in the midst of recovering from its most severe economic shock in two
decades. This shock is made more severe because it was unexpected. It is difficult
to over stress the social impact of this shock, coming as it did after a decade of 10
percent growth, one of the highest anywhere in the world.
2. The output shock following the recent global economic crisis revealed a number of
key structural weaknesses in the Cambodian economy. Its growth was concentrated
in a few foreign direct investment (FDI)-dependent industries such as garments,
tourism and construction. Most of this is also concentrated in a few urban centres,
especially the capital, Phnom Penh. Its domestic private sector remains a collection
of tiny family enterprises within the informal economy. High economic growth in
the recent past triggered a structural transformation in the composition of the gross
domestic product (GDP). However, Cambodia remains a largely agrarian economy.
The agricultural sector is characterised by subsistence farming with rice being the
principal crop.
“The output
shock
following the
recent global
economic
crisis revealed a
number of key
structural
weaknesses
in the
Cambodian
economy.”
3. Rapid economic growth in a few concentrated areas and sectors and the rapid
expansion of the urban labour market that accompanied it has served to conceal
underlying structural problems in education and skill formation. While Cambodian
primary education enrolment ratios showed a sharp increase from 1997 onwards,
from just over 50 percent of the relevant student age to over 81 percent a decade
later, this drops sharply in later stages of the educational cycle. In 2007, only 24
percent of Cambodian children completed lower secondary school, 15.6 percent
upper secondary school and just 2.7 percent completed tertiary education. This
is a cause for worry. Comparative ratios in neighbouring countries within the
Association of Southeast Asian Nations (ASEAN) such as Indonesia, the Philippines
and Thailand are substantially higher despite a doubling of secondary school
enrolment ratios in Cambodia over the 1997-2007 decade. Cambodia is especially
far behind its regional neighbours in tertiary education. In 2007 the enrolment ratio
in this sector was just 5 percent, compared to 12 percent in Lao PDR, 17 percent in
Indonesia, and 28 percent in Philippines.
4. Rapid growth of GDP during the decade prior to the recent global economic
crisis, combined with a demographic structure in which some 60 percent of
the population are below 24 years of age, has generated high levels of internal
migration on the one hand and the highest rates of projected labour force within
ASEAN on the other. This serves to complicate the skill development problem even
further. Migrant populations are more difficult to identify and redirect into formal
secondary school programmes. In addition, a fast growing labour force also puts
stress on an already poor school infrastructure. This is not taking into account the
impact on poverty of the recent economic crisis which encourages the short-term
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TITLE
Human Capital Implications of Future Economic Growth in Cambodia
economic premium on sending children to work instead of the long-term benefits
of finishing school.
5. Sharp inter-regional differences in school attendance and quality only complicate
this overall picture of weak human capital development in Cambodia. While
primary school enrolment is relatively uniform across regions in Cambodia, the
picture is quite different when it comes to secondary and tertiary education. In
the case of lower secondary education alone this can vary from low performing
regions such as Rattanakiri to the highest, Phnom Penh, at a ratio of one to ten.
Equity and access dimensions of skill development even at this rudimentary level
are thus likely to be of major importance to policy-making in the future.
6. On a political note, the Royal Government of Cambodia (RGC) has responded to
these policy challenges by designing a comprehensive development strategy, the
Rectangular Strategy for Growth, Employment, Equity and Efficiency in Cambodia,
which focuses not only on economic growth, but also on social stability and
welfare, on governance and anti-corruption as well as on economic diversification.
This strategy provides most of the key building blocks for future sustained
recovery, particularly because it seeks to integrate economic policies with human
development ones.
7. In the immediate context of the recent global economic crisis, however, Cambodia
continues to face a number of critical policy challenges. First, finding ways
to mitigate the impacts of the output and trade shocks on the poor. Second,
putting laid-off workers in its principal industries – such as garments, tourism and
construction – back to work. Third, promoting new sources of future growth so
as to partially insulate the Cambodian economy from international financial and
economic shocks in a globalised economy. Fourth, ensuring that future growth is
broad-based so as to reduce income inequality across regions and households.
8. An important challenge facing policy-making is to work out how to link the shortterm priorities of employment generation and poverty alleviation with the longer
term task of economic diversification, building a robust human capital base and
strengthening government capacity to face future challenges of financial regulation,
climate change mitigation and combating economic inequality, problems now
being faced by almost every country in the ASEAN plus region.
Economic Diversification and the Human Capital Development Roadmap
9. The government’s approach to human capital development in the context of the
recent economic shock was, in addition to maintaining macroeconomic stability,
to restore the employability of its laid-off workers as well as to seek to restore FDI
flows to Cambodia, which were badly damaged during the global credit squeeze.
It has also acted to improve labour market information through the creation of
a National Employment Agency, promote vocational training through a National
Training Board (NTB), close the skill mismatch between skilled labour supply and
demand through structured consultation and joint reviews with the private sector,
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Human Capital Implications of Future Economic Growth in Cambodia
as well as engaging in a search for an appropriate and market friendly future
industrial diversification policy.
10. These are all important initiatives although they still lack the critical minimum mass
to make a significant dent in the employment picture. Nevertheless, they reflect a
partial approach to what is an economy-wide problem: the creation of a human
capital base commensurate with the government’s economic diversification
strategy on the one hand and its social welfare priorities on the other. In fact, the
structural problems facing the education and skill development sector today are
partly the result of not being able to address them during years of record growth.
As Cambodia goes forward towards a more diversified, sustained economic growth
in the future, it is time to design and implement a new, comprehensive Human
Capital Development Roadmap.
“...a Human
Capital
Development
Roadmap
will allow
Cambodia to
integrate shortterm measures
of employment
promotion with
the longer term
priorities of
economic
diversification...”
11. The urgency of creating such a Roadmap is also rooted in recent thinking on
economic diversification strategies themselves. The reform of the education and skill
sectors being undertaken by most developed and dynamic developing countries,
especially within Asia, along skill and product lines, suggests a growing acceptance
of the view that future growth and productivity will be driven by ’knowledge
products‘ including the capacity of countries to emulate frontier technologies.
Only a comprehensive approach to future human capital development captured
in a Human Capital Development Roadmap will allow Cambodia to integrate
short-term measures of employment promotion with the longer term priorities
of economic diversification and the building of state capacity to deliver such a
diversification programme on the ground.
12. Putting all of the above requirements of preparing the foundation of a national
policy for tapping into the global knowledge economy, and transforming these
into a roadmap for human capital development implies keeping the following
main principles centre stage:
• Ensuring nationally defined minimum quality, access and participation
rates in basic and secondary education in order to provide a sure
foundation for vocational and on-the-job training as well as for institutions
of higher learning. This means addressing the root causes of school dropouts, inter-regional disparities in secondary school access and quality,
and the curricula relevant to entry into the world of work. This is a major
challenge for the Cambodian education system, but even this by itself will
not be enough to ensure the success of industrial diversification policies
without adopting a long-term knowledge economy paradigm.
• Adopting a life cycle approach to human capital development whereby
opportunities for new learning are made available at all segments of the
life cycle.
• Assessing human capital requirements not only of business, but also of
research and development (R&D), innovation networks and business
parks, and of capacity building requirements of government agencies.
• A careful integration and ordering of long-term education and training
targets and quality benchmarks with short-term, informal education and
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Human Capital Implications of Future Economic Growth in Cambodia
•
•
•
work retooling, without expecting short-term skill mismatches to be
settled through mainstream education programmes.
Balancing the contributions of mass expansion of secondary and higher
education with the need to build specialised elite institutions able to tap
into international research and technology for the knowledge economy.
Producing a long-term financing plan for public expenditure on human
capital in a knowledge economy framework, taking into account
the possibility for public-private financing of education and training
programmes already prevalent in many Asian economies.
Development of an institutional mechanism for coordinating and joint
programming of the Human Capital Development Roadmap taking into
account the four pillars of the knowledge economy, perhaps with the
participation of non-governmental agencies (e.g. a National Knowledge
Agency or a Productivity Commission).
Human Capital and State Capacity Building
13. Since short-term job creation and poverty alleviation priorities have dominated
education and training policy following the global economic crisis, little attention
has been given to human capital development problems within the government
sector itself.
14. However, as Cambodia continues to consolidate its democratic system, promote
social welfare, deal with a number of global problems ranging from financial
regulation to climate change, and move further towards economic integration
with ASEAN, the human capital dimensions of government and associated bodies
will become increasingly critical. It is therefore key that the proposed Human
Capital Development Roadmap not only be linked to the Economic Diversification
Programme, but also to ensure that the State has the right set of skills in sufficient
quantity to implement such programmes.
15. Another key recommendation of the present report is that raising the quality
of growth by promoting equitable access to education and skill development
opportunities is an integral element of a future Human Capital Development
Roadmap. In the context of an economy diversified to enable it to absorb new
products and new types of knowledge-linked FDI, wide access to innovation and
knowledge is part of the process of raising productivity levels. Equity therefore will
continue not only to have social relevance, but also economic and productivity
related relevance.
Investing in Human Capital in Cambodia
16. This Report reviews the sectoral data and skill gaps, and human capital priorities
in major industries ranging from garments and tourism to mining and information
technology. While data on employment and skill gaps is still rudimentary, it does
point to the need for concrete action in a range of areas. An overall set of actions is
illustrated in the policy matrix attached to this summary.
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UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
17. At the same time, current data does not allow us to provide a micro level set of
recommendations on how to improve skill mismatches, how to provide incentives
for vocational training as an alternative to tertiary education institutions, how to
attract skilled teachers to training institutions and so on. Plugging the information
gap in the employment and skills area is an immediate priority.
18. It is also critical to understand more fully the concern with the ’shortage of soft
skills‘, often cited by Cambodian employers. Moreover, a number of economy-wide
initiatives are possible to address many of them (e.g. punctuality, politeness, and
work attitudes) through national distance learning techniques that have been used
in educational campaigns in many developing countries, such as Mexico.
“...one of
the key
contributions
of the Human
Capital
Development
Roadmap is to
create a
long-term
and sequenced
framework...”
19. The most important aspect of future policy on human capital development is to
adapt mechanisms to integrate long-term and short-term priorities. Given that
investment in human capital is an activity with a long gestation period, one of
the key contributions of the Human Capital Development Roadmap is to create a
long-term and sequenced framework within which crisis response concerns can be
addressed. The suggested Policy Development Matrix in the annex provides some
building blocks indicating how a country might proceed.
Human Capital in Cambodia: Reasons for Optimism
20. The construction of a Human Capital Development Roadmap in line with Cambodia’s
economic diversification, state capacity building and social welfare plans requires
painstaking work. However, it is the only way to prevent the build-up of future
structural bottlenecks such as those encountered in the decade from 1998-2008.
However, given Cambodia’s enormous economic development achievements in
the past two decades, this is clearly achievable.
21. It is to Cambodia’s enormous credit that despite a history of internecine conflict,
loss of human capital, political instability and social conflict, events which might
have pushed other countries into a prolonged state of institutional decay and
economic ruin, it has managed to consolidate a new political system of electoral
democracy, to usher in a period of record growth and to sharply raise its human
development performance.
22. Moreover, Cambodia has not only recovered from social conflict and loss of human
capital, it has also undertaken wholesale institutional transformation, established
completely new sources of growth and employment (such as bringing enormous
numbers of female workers into the labour force), decisively moved away from
central planning to an open market economic system, reached out to international
and inter-regional organisations and agencies (such as ASEAN), and initiated a
formal and organised system of regular dialogue with the private sector. It has
also had to battle with the fallout from two massive economic shocks, the first in
the form of the Asian Economic Crisis in its own neighbourhood, and the second
on a global scale triggered by the US mortgage crisis. In response, Cambodia has
not only resisted protectionism, but has also increased its engagement with the
private sector, and has invited aid organisations to work with it on many complex
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Human Capital Implications of Future Economic Growth in Cambodia
areas of economic policy, from aid effectiveness to international competitiveness,
investment climate, labour markets and human capital needs.
23. While future growth is unlikely to be a repeat of the past for reasons examined
closely in the World Bank’s country growth diagnostic report (2009c) and mentioned
in the present paper, the prospects are not as dreary as might appear from a dry
recitation of global economic data, competitiveness surveys or the quality of FDI
and the footloose nature of the international garments industry. The economic
diversification programme within a knowledge economy productivity framework
is one part of the policy agenda. The construction of a Human Capital Development
Roadmap, beginning with a long-term view and integrating short-term labour
market and skill shortage concerns, is the other essential part. One way to address
this is to provide policy makers with a comprehensive Human Capital Development
Roadmap at the next meeting of the Cambodia Economic Forum, using the best
global analytical techniques and country experiences possible.
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Policy Recommendations
Immediate
interventions
Crisis response and recovery
• Poverty alleviation
• Increase social safety nets and ensure safety nets have adequate funding
• Dealing with internal migration
• Promoting private sector development and cooperation
Addressing unemployment
• Targeting rural and poor individuals and communities most affected by economic crisis
• Investments in infrastructure that are employment intensive and encourage local development
• Improve labour market information
Stopping school drop-outs
• Increase in subsidies for continuing education
• Strengthen and expand the Scholarship for Poor Programme (lower secondary scholarships and pilot
of primary scholarships)
• Increase minimum school-leaving age
Establish system able to pool data and information on relevant education and industry statistics
• Create information system of education and industry statistics
• Create system able to analyse and process information collected from information database for appropriate policy formulation
Short-term
interventions
Filling the skills gap
• Improve conventional training to increase soft and hard skills
• Identify and expand training for key areas that are in need of increased skill provision
• Ensure adequate financial backing for new training and skill building programmes
Short- to long-term
interventions
Improve vocational training
• Increase flexibility and modularisation of training
• Increase systems of quality assurance in TVET
• Improve quality of TVET facilities and equipment
• Opening up of pathways between TVET and higher education
• Expansion of private and NGO TVET providers
Long-term
interventions
Reform higher education
• Reorganisation of management, governance, and financing of higher education institutions
• Increased and sustained funding for higher education
Governmental institutional reform
• Government focus shifting to more cooperative engagement in the higher education system
• Increasing government and private sector cooperation
Life-long learning
• Creation of life-long learning vision for Cambodia
• Increased focus on individual returns generated from learning throughout one’s lifetime
• Increasing coordination and decreasing incompatibilities in educational qualification standards
For more information on policy recommendations, see Annexes.
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Human Capital Implications of Future Economic Growth in Cambodia
I.
HUMAN CAPITAL AND ECONOMIC GROWTH
1.1
Introduction
There is little doubt that the recent global financial crisis has dealt a remarkably severe
economic blow to Cambodia’s pace of economic development. One key reason for
this is the high dependence of the Cambodian economy over the last decade on three
economic activities: tourism, garments and construction. Another is the very fact that
the suddenness and the severity of the global financial crisis were more deeply felt by
an economy, such as Cambodia, growing at a staggering 10 percent per annum during
the 10 years preceding the recent crisis. To go from average 10 percent growth to an
absolute output fall is reminiscent of the scale of shock experienced by the former
USSR in the early 1990s or Indonesia in 1998-99. In both cases the subsequent recovery
took longer than had been anticipated at the outset of the crisis. It also revealed critical
institutional and governance shortcomings which are still being corrected.
“There is little
doubt that the
recent global
financial crisis
has dealt a
remarkably
severe
economic blow
to Cambodia’s
pace of
economic
development.”
The recent economic shock could not have come at a worse time. The last decade
saw, for the first time in over a quarter of a century, a return to political normality and
economic advancement long forgotten amidst the turbulence of political and social
violence and the stagnation of low productivity agriculture. While some of the double
digit growth over the last decade could be ascribed to low base levels, and a oneoff peace dividend, this was a small part of the overall story. A determined attempt
to move from a planned to a market economy and from stifling political strife to an
electoral democracy is also a necessary part of the picture. Economic indicators such as
ratios of FDI to GDP or numbers employed in the rapidly expanding garment industry
or the real estate boom in Phnom Penh hide the much more interesting story of social
resilience, political acumen and institutional transformation which lie at the heart of
Cambodia’s spectacular growth record over the decade from 1998 to 2008.
As Cambodian policy makers strive to navigate the Cambodian economy and society
out of yet another severe economic downturn and accompanying social stress, they
are faced with an historically unprecedented set of development circumstances in
which future Cambodian economic recovery needs to be centred. First, the severity
of the recent global economic crisis in the developed countries of North America and
Europe have begun to spell a future shift of economic centre of gravity towards the
large economies of Asia, notably India and China, and perhaps Indonesia. Second,
recovery from the Asian Financial Crisis of 1997-98 has also led to a changing pattern
of trade within the ASEAN region and between ASEAN and other neighbouring Asian
economies. This has been followed by much greater regional trade integration as spelled
out by a series of bilateral and regional free trade agreements. Third, globalisation
continues to reduce costs of transport and communication, change supply chains and
networks and continually expand financial and cross border labour flows.
The broad implication of these developments in the international and regional
economies in Asia is that the world does not stand still while one country or region
recovers from a deep economic or financial crisis. Crises are themselves periods
of economic and political adjustment with industries moving from one location
to another, investors fleeing to safe havens and government expenditure moving
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Human Capital Implications of Future Economic Growth in Cambodia
“...patterns of
past growth may
not be a good
guide to the
nature of future
recovery.”
from investment to social welfare and subsidies. Severe economic shocks therefore
obviously raise the question of the extent to which economic recovery will replicate
the growth patterns and competitive advantage of past periods of high growth or
whether recovery will take place against a very different set of technological, price and
trade related variables in the international market. To put the point simply, in guiding
recovery from a major output crash, patterns of past growth may not be a good guide
to the nature of future recovery.
1.2
Human capital, knowledge economy and economic growth:
The shifting paradigm
1.2.1 The rise of human capital
It is precisely in this context of future drivers of growth in a global economy that the
question of human capital formation has increasingly become paramount. Of course
open markets, export orientation and the sharp rise in literacy levels have frequently
been considered as the major underlying explanations for the Asian Economic Miracle.
In that sense, human capital both in terms of basic skills as well as labour discipline (the
’Asian Values‘ element) has been a rather traditional feature of government policy in the
newly emerging economies of East Asia. The issue has not been without controversy
as the debate surrounding the sources and sustainability of economic growth in the
Asian Miracle countries illustrates.
In a sense, the contributing factors which account for the growth performance of
East Asian countries still remain a matter of dispute with the pendulum swinging
between those who see economic growth in the region still being driven by factor
accumulation (largely capital and labour) and those who see total factor productivity
becoming increasingly more important as the speed of inter-sectoral shifts of labour
from agriculture to industry and services declines and real wages rise. The impact of
capital accumulation is also seen to be unsustainable in many Asian economies partly
because domestic savings and investment rates are already reaching peak levels and
because FDI is concentrated more in some countries than in others.
Despite the continuing fascination with growth accounting and differing views of the
importance of productivity over factor accumulation in explaining high growth in
East Asian economies, the broad view is that investment in human capital, particularly
in early stages of growth, is an important factor in economic diversification and in
attracting FDI to the region (World Bank 1993 and ADB 1997). Much of the attention in
the context of East Asian economies has been on the rapid rise in primary education
enrolment rates and the associated rise in literacy rates as well as the fact that there is
increasingly little difference in male and female literacy rates.
The overall result was to successfully transfer large pools of rural labour to new labour
intensive industries such as textiles, garments, shoes, and later electronics assembly
in emerging East Asian cities. This broad picture was supported by estimated rates of
return on investment in primary education. Early estimates showed that these were
much higher than for investment in secondary or tertiary education, itself seen as
evidence that East Asian economies were not only export oriented and human capital
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enhancing, but that they were making efficient public investments in the right form of
education and training.
The Asian economic crisis marked a watershed in development thinking. It not only
showed the dangers of unfettered globalisation: sudden capital flights, regional
contagion, currency collapse and sharp inflationary spikes, which threatened to undo
several decades of rapid economic growth and per capita incomes. It also showed that
economic recovery might involve economy-wide economic and institutional reforms.
When the 2008 Global Economic Crisis emerged, it became apparent that financial
shock and economic recession were not only the preserve of developing countries
integrated into the global economy, but of developed industrial countries as well.
The recent global economic crisis has illustrated what many had suspected since the
early stages of globalisation in the mid 1990s: dramatic falls in the cost of transport and
communication technologies, the creation of a global capital market with enormous
blocks of institutional investors looking for new investment opportunities, and the
changing supply chains that freer movement of capital and skilled labour created had
led to fundamental shifts in the underlying determinants of growth in this new, more
competitive international arena.
Indeed, while the crisis-affected countries of East Asia were trying to revive historically
familiar record rates of economic growth, manage the social costs of the economic
shock through social safety nets and poverty alleviation measures, reform their financial
systems to prevent future meltdowns and maintain the integrity of government
budgets by improved debt management and reform of budgetary systems, thinking
on the determinants of future economic competitiveness and growth had already
begun to shift. A flavour of the new thinking on global economic growth is given
by the following excerpt from the report of the Task Force on Higher Education and
Society (2000):
The world economy is changing as knowledge supplants physical capital as a
source of present and future wealth. Technology is driving much of this process,
with information technology, biotechnology, and other innovations leading to
remarkable changes in the way we live and work.
As knowledge becomes more important so does higher education. Countries
need to educate more of their young people to a higher standard – a degree
is now a basic qualification for many skilled jobs. The quality of knowledge
generated within higher education institutions and its availability to the wider
economy, is becoming increasingly critical to national competitiveness.1
Seven years later, just when the East Asian economies were on the threshold of
a sustained economic recovery from the financial shock of the late 1990s, the new
development thinking had begun to take hold in major international institutions and
with policy makers in most developed and many developing countries. World Bank
(2007a), “Building Knowledge Economies, Advanced Strategies for Development”,
set out to show how knowledge had shaped the growth paths of many developing
economies. The much quoted examples of Korea and Ghana showed the dramatic
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Human Capital Implications of Future Economic Growth in Cambodia
growth divergence (beginning with almost identical levels of real per capita GDP),
between 1960 and 2005 which could be triggered through the economy-wide
accumulation of knowledge.2
The period since the mid-1990s when global currency and commodity markets
expanded sharply was also a period of structural change in international trade. At the
heart of this structural shift lay the sharp increase in global trade in high technology
manufactures, mostly in new commodities which were the by-products of new
technological innovations in the global economy. The changing structure of trade and
production was illustrated in the sharp increase in the weight of the service sector
in overall GDP, especially in high income countries. It was also mirrored in the rise of
the percentage of the population with tertiary level education across the developed
world. The combined result was that in advanced economies some 70 percent of the
labour force is employed in services; a dramatic shift in countries which not very long
ago were seen to be the industrial heartland of the global economy. Empirical research
shows that by the mid-2000s the employment effects of this structural shift in favour
of knowledge sector products was emerging. Thus, in the case of the US economy
from1995-2005, while jobs in high and medium tech manufacturing declined by 15.7
percent, they rose by 27.2 percent in knowledge-based services. Similar results were
shown for the European Union (EU) 15, with a fall of 2.4 percent in the manufacturing
category and a rise of 30 percent in knowledge-based services.3
An important consequence of this changing international division of labour was that
developing countries, even those with a successful history of high GDP growth and
export promotion, risked being trapped in the low manufacturing segment of the
product value chain (see figure 1.1).
Figure 1.1 Typical division of labour in global production networks
Source: World Bank 2007a, p. 19.
This was paradoxical since it was the successful low wage, low technology
manufacturing countries of East and South-East Asia which most risked being caught
in the low technology/low value added trap. FDI, which brought early high investment
and growth, attracted investment in the first instance with ample supplies of low
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Human Capital Implications of Future Economic Growth in Cambodia
wage labour, would also heighten the danger of being trapped in the low valueadded activities while much of the profits from R&D, product design, marketing, and
brand exploitation were captured by developed country firms specialising in these
knowledge products.
Of course, the rapid spread of the knowledge economy did not always tell a gloomy
tale. Developing countries did not necessarily have to go through a painful and highly
capital intensive phase of development to score record rates of economic growth.
Services, and the knowledge economy, allowed developing countries to leapfrog
traditional development trajectories, as in the case of the Indian IT industry. This also
obviated the need for major investments in physical infrastructure capital compared
to manufacturing or mining sectors since transfer of data, information, and provision
of financial and other such services incurred relatively less cost than commodity
production and trade.
“The prime
mover in the
knowledge
economy story
was not only
the skill or
innovation
systems,
but also the
process of
international
integration and
globalisation.”
1.2.2 Globalisation, knowledge economy and the scope for industrial policy
But the new paradigm for the knowledge economy as the most important source of
future economic growth was not all about investment and business needs for new
skills. The prime mover in the knowledge economy story was not only the skill or
innovation systems, but also the process of international integration and globalisation.
The problem which lay at the heart of policy for engineering future economic growth in
specific countries was that the global economy was itself generating new and sudden
economic shocks based on the volatility of international capital markets.
Hence, the global economy, while bringing new markets and technologies, also
brought added instability and risks. Policy makers at the national level increasingly
had to design economic recovery strategies which would take into account the rapidly
changing nature of the global economy. Economic policy was therefore not just a
matter of fiscal austerity, lower budget deficits or exchange rate corrections; it was just
as much a matter of anticipating the impact of new trading arrangements and new
products governing international markets while recovery was taking place.
In this context, an important and controversial question facing developing country
governments was the scope and design of an industrial promotion/diversification
policy in the country’s overall development strategy. This issue is a popular theme in
Cambodia today. This is partly because of the concentration of past economic growth
in just a few industries such as garments or construction. It is also partly due to the
realisation that the nature of FDI matters and that not all forms of FDI are equally ‘fixed’.
Garments are much more footloose than automobiles, for example. Cambodia faces a
number of critical problems in its industrial composition and investment: very large
number of small or tiny enterprises, low levels of technology and low value added
products, few economy-wide linkages, industrial unrest and rising unemployment,
skill mismatches, and so on. Industrial diversification is the preferred strategy, but the
method of diversification is still under debate.
The most obvious route to diversification is to diversify product ranges and allied
industries. Producing better designed and a larger variety of garments, moving from
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Human Capital Implications of Future Economic Growth in Cambodia
“...the advent
of the
knowledge
economy on
the global
stage...[has]
increased the
attraction of
industrial
policy.”
rice production to rice milling and processing, or from food crops to cash crops,
widening the destinations and the variety of tourism. The assumption is that this
kind of diversification is in line with Cambodia’s comparative advantage in the sense
that it uses Cambodia’s abundant factors: a cheap, plentiful and young labour force,
productive land, and stable governance structures committed to promoting exports
and attracting FDI.
Industrial policy however remains a highly controversial area of economic policy.
Much of the controversy is linked to wider issues of the role of the state in economic
development. Many of the objections to industrial policy relate to the dangers of
resource allocation inefficiency of ’picking winners‘ and the protection that was offered
to infant industries which often became centres of corruption and red tape.
In recent years, however, opinion with respect to the role of the state in economic
management as well as the part it can play in industrial diversification has begun
to change. The spectacular collapse of renowned investment banks and financial
institutions in a web of corruption and mismanagement showed that corruption is
not only a public sector problem in developing economies but is endemic in all kinds
of political regimes at virtually all levels of economic development (Mishra 2009). The
recent global economic crisis has shown in a dramatic way the extent to which the
state has had to intervene to recapitalise banks, to restructure and regulate financial
instruments and to downsize management fees and bonuses.
In any case, the advent of the knowledge economy on the global stage and the
possibilities of leapfrogging the standard trajectory of development from agriculture
to industry to services on the one hand and the dangers of being trapped in a low level
manufacturing trap on the other have increased the attraction of industrial policy.
What is more, the examples of Korea, Taiwan, Malaysia, China, and now India, all show
that an active industrial policy has produced development dividends in Asia.
Of course this does not imply that there is a standard off-the-shelf recipe of industrial
diversification which can be applied to Cambodia, but it does illustrate the major shift
in development thinking linked to the pressures of globalisation and the advent of
a knowledge economy which will set the stage within which Cambodian economic
policy has to operate. Some indication of how far international opinion and South-East
Asian practice have changed is provided by the conclusion reached by Cimoli, Dosi
and Stiglitz (2009) (bold added):
Countries differ – possibly even more so than in the past – in their capabilities
of absorption of production technologies and product design capabilities
developed in ‘frontier’ countries. If anything has changed, it is that under
multiple forms of localised increasing returns, greater degrees of international
integration fostered by globalisation – when left to themselves – may well lead
to the phenomena of increasing national and international differentiation with
self reinforcement and lock-into particular production activities, specialisation
patterns, and technological capabilities (or lack of them). Globalisation by itself
is no recipe for some sort of natural catch-up in technological capabilities
and for easy convergence of incomes. On the contrary, more interdependent
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economies are likely to require more and more sophisticated measures of policy
intervention by weaker countries (bold added).
These conclusions are not yet part of the mainstream of international financial
institutions’ approach to international trade and competitiveness policy,4 but they are
part of the new cutting edge development research and are attracting the attention
of policy makers in developing Asia who are faced with economic collapses, growing
inequality and rapid structural changes in the composition of output. In addition,
state assistance to infant industries, long-term build up of technological adaptation
capacity, and learning from FDI and imported machinery are important components
of the success stories of Korea, Taiwan and the Asian Tigers.
The attraction of an industrial policy aimed at diversification on the one hand and
raising labour productivity and real wages on the other to Cambodia, whose leading
industries are caught in a sudden nose dive, is obvious. At a time when orthodox
economic opinion is also moving towards redefining concepts and categories, the
Cambodian search for an appropriate industrial policy backed by a human capital
strategy designed to expand technological absorption capability is a clear indication
of the dynamism of government thinking on the alternative paths to a sustained
recovery.
1.2.3 Education, human capital and economic growth
All this brings us back to the question of the relationship between human capital and
economic growth. It is clear from the above that the simple approach to linking human
capital, measured by mean years of schooling or some such indicator, to growth of
productivity and to GDP growth, while useful as a general argument for granting
policy and public expenditure priority to education, is inadequate for development
strategy formulation purposes. It is also widely recognised now that the emphasis on
basic education as providing the highest rate of return on investment in education
has also been overtaken by knowledge-related developments in the global economy.
While rates of return to education at different levels are useful for macro comparisons
and scenario building,5 the rate of return on investment and the increases in total
factor productivity and economic growth that might be triggered by it all need to be
adapted in light of the new paradigm of building the knowledge economy.
1.3
Elements of the knowledge economy
Human Capital Development Roadmap
Another implication of the knowledge economy perspective is the need to rethink
the parameters and guiding principles of human capital development policy at the
country level. First, while higher education is at a premium in the knowledge economy
framework, it is one of several interlinked main components: education, innovation
systems, information infrastructure and governance (or institutional regime). This
implies that human capital development strategy should span not only education
(particularly higher education and training segments), but also the institutional
framework and incentives promoting innovation networks, information technology and
governance/policy regimes. It is the network of institutions and interlocking incentives
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that provides the key to raising national absorptive capacity for emulating frontier
technologies and processes. An important part of the Human Capital Development
Roadmap is to assess the education and training needs not only of industry, but also
of innovation networks, information infrastructure and government. Exclusive focus
on business related training needs may enhance employability in the short run but
will not ipso facto be effective in increasing economic diversification and international
competitiveness of the country as a whole.
Second, servicing the human capital needs of a knowledge economy-oriented strategy
is a long-term process. The gestation period between reform of the education system
and establishing quality training programmes for business and government can span
a decade or more. Estimation of rates of return from public investment in education
and training in such a context is subject to much subjective judgement and arbitrary
choice of measurement indicators. Given problems of data and quality specification,
the best that can be done in field situations is to focus on the broad direction of the
volume and quality of education and training services provided rather than a standard
cost-benefit approach to education and training investment.
Third, in the context of continuous evolution in the structure of GDP, a deliberate
industrial diversification programme by the government or the inevitable time
lag between education and training and achieving the right mix of human capital
competence, skill mismatch will be a fact of economic life. The policy question is to
decide when the level of mismatch reaches beyond some acceptable level and policy
changes must be made. In fast changing global production networks and the relative
international mobility of different industries, deciding when a skill mismatch is a policy
problem as distinct from a frictional disjunction between supply and demand for a
specific type of labour.
Fourth, building a future knowledge economy also requires a different perspective
on education and training as a whole. On one hand it requires a lifelong approach to
training, as workers are retrained to tap into changing global and national technologies
and production processes. On the other, given that a considerable part of promoting
national innovation and emulation is based on the operation of imported machinery
and management networks, increasingly formal training has to be supplemented by
much learning-by-doing as the design and sophistication of new imported machinery
and services evolves. The growing use of information technology also opens up the
question of the forms of training and education provided through distance learning
and training upgrade programmes.
Fifth, a long-term life-cycle approach to human capital development implies a longterm financial commitment to such programmes. In fast growing economies, this has
not always been difficult since even a constant fraction of public expenditure over
time implies rising expenditure on education and training. However, during economic
downturns and recessions financing for such activities must be protected, something
only possible under a policy of setting aside a share of windfalls and other forms of
fiscal surplus in high growth periods as a contingency for low growth ones.
20
Sixth, a considerable part of the success of the knowledge explosion over the last 15
years and more is the widening as well as deepening of knowledge networks. The former
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Human Capital Implications of Future Economic Growth in Cambodia
has allowed unprecedented participation of individuals and institutions in all walks
of life to contribute to the overall stock of international knowledge. The secret of the
knowledge revolution is not the construction of a few elite and specialised institutions
for research and innovation. It is its ability to promote mass participation in knowledge
sharing and problem solving that is the driving force of the current global economy.
Seen in this context, national knowledge promotion and human capital development
policy also needs to strike a balance between establishing high profile specialised
institutions and widening the knowledge network of what has rather unattractively
been called ‘massification’. The balance between depth and breadth of the education
and training networks and institutions is part of building the knowledge economy and
not merely a question of ’equity’ or social mobility and social fairness.
“...It is its ability
to promote mass
participation
in knowledge
promotion and
human capital
development
that is the
driving force
of the current
global economy.”
Putting all the above requirements for creating a national policy to tap into the global
knowledge economy into a roadmap for human capital development implies keeping
the following main principles centre stage:
• Ensuring nationally defined minimum quality, access and participation rates in
basic and secondary education so as to provide a sure foundation for vocational
and on-the-job training as well as for institutions of higher learning
• Adopting a life-cycle approach to human capital development
• Assessing human capital requirements not only of business, but also of R&D,
innovation networks and business parks, and of capacity building requirements
of government agencies
• A careful integration and ordering of long-term education and training targets
and quality benchmarks with short-term, informal education and work retooling,
without expecting short-term skill mismatches to be settled through mainstream
education programmes
• Balancing the knowledge economy contributions of the mass expansion
of secondary and higher education with the need to build specialised elite
institutions able to tap into international research and technology
• Producing a long-term financing plan for public expenditure on human capital in
a knowledge economy framework, taking into account the possibility for publicprivate financing of education and training programmes
• An institutional mechanism for coordinating and joint programming of the
Human Capital Development Roadmap taking into account the four pillars of
the knowledge economy
1.4
Human capital, economic diversification
and economic recovery in Cambodia
The unanticipated severity of the global economic crisis and its massive impact on
the Cambodian economy has generated a remarkable amount of analyses, technical
papers, policy documents and economic predictions in the course of the last two years.
Despite the richness and variety of such documents, there is as yet no discernible
Human Capital Development Roadmap for Cambodia which covers even a significant
part of the knowledge economy agenda outlined above.
The Growth Diagnostic Study produced by the World Bank rightly emphasises the lifecycle approach to education and learning, as well as underscoring the importance of
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“...the RGC’s
Rectangular
Strategy
Phase II contains
virtually all the
elements
necessary for
the construction
of a Human
Capital
Development
Roadmap.”
continued economic integration into ASEAN and associated economic trading and
investment arrangements. A range of International Labour Organization (ILO) studies,
together with the recent World Bank skills report, have focused on youth employment
and industry requirements for vocational training, while many studies have focused
on the investment climate issues and Cambodia’s relative position in international
competitiveness rankings. But these are at best partial, often short-term responses to
the broader issue of industrial diversification.
The government’s approach to human capital development in the context of the
recent economic shock has been, in addition to maintaining macroeconomic stability,
to restore the employability of its laid-off workers and seek to restore FDI flows to
Cambodia. It has also acted to improve labour market information through the creation
of a National Employment Agency, promoting vocational training through a National
Training Board (NTB), closing the skill mismatch between skilled labour supply and
demand through structured consultation and joint reviews with the private sector and
to engage in a search for appropriate and market friendly policies for a future industrial
diversification policy.
These are all important initiatives in the short-term context of an economic downturn.
If they are to amount to more than temporary economic shock relief or reduce frictional
unemployment brought about by poor labour market information they need to be
underpinned by a carefully thought-out Human Capital Development Roadmap in
conjunction with an industrial diversification strategy.
In fact, the RGC’s Rectangular Strategy Phase II contains virtually all the elements
necessary for the construction of a Human Capital Development Roadmap aimed at
taking Cambodia into the global and regional knowledge economy. It rightly contains
policies for industrial growth, employment and social safety nets, and key aspects of
governance and public administration reforms. If innovation networks and R&D policy
is added, we have a broad set of components for an overall human capital strategy
appropriate to building the foundations of a knowledge economy.
In the context of an economic shock it is often difficult to persuade policy makers to
focus on what might seem to be long–term programmes of human capital investment.
However, in the Cambodian context priority to human capital development also has
short-term imperatives.
Almost all developed and many developing economies, especially within Asia, have
already been in the throes of major reform of their human capital base and training and
education systems for much of the last decade. Industrial diversification into new global
products cannot be effectively carried out without a rapid upgrading of Cambodia’s
own human capital resources. The wide range of economic agreements signed within
ASEAN and between ASEAN and other economies of Asia Pacific (as well as the EU), are
rapidly changing the trade and investment terrain into which Cambodia’s new, more
diversified industrial economy will have to operate. Given this situation, long-term and
short-term crisis responses cannot be so easily separated out.
1.5
22
Organisation of chapters within this report
UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
One of the key aims of this report on human capital in Cambodia is to provide insights
and basic building blocks for such a future Human Capital Development Roadmap.
Chapter 2 provides an overall picture of the state of human capital in Cambodia today.
Chapter 3 focuses on sector specific training and skill base issues. Chapter 4 looks at
the human capital essentials of the non-business sector. Chapter 5 provides an outline
of a possible human capital strategy for Cambodia. Chapter 6 concludes and draws
some key policy conclusions and preliminary policy recommendations.
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Human Capital Implications of Future Economic Growth in Cambodia
II.
HUMAN CAPITAL IN CAMBODIA TODAY
This chapter will attempt to take stock of the levels, quality, and impact of human
capital in Cambodia today. It will examine the overall characteristics and key features
of human capital development in the country, in order to set the stage for the analysis
in the following chapters. In doing so, it will examine factors such as demography,
migration, school attendance, quality and levels of training, employment trends,
mismatch between education and labour demand, regional variations, government
policy, and challenges faced in Cambodia.
“...trying to determine the human
capital stock of
a country...is not
as simple as just
looking at how
many people are
in school or how
many people
have graduated.”
In trying to determine the human capital stock of a country, it is not as simple as just
looking at how many people are in school or how many people have graduated. While
this shows part of the picture, there are many gaps. If x amount of people graduated,
how many did not? What did those people that graduated do with their education?
Was their education useful? Will they continue their education? And how will that
education, in the end, affect both their career path and the growth of the country’s
economy?
These questions demonstrate the need to examine varied and sometimes disparate
ideas and variables before being able to come up with a truly complete picture.
The preferred indicator for evaluators is often the average years of education in the
population. However, there are major concerns with using only this. For example:
• Differences in education quality between countries and even between regions
or schools within a country mean that a year of school for one pupil may not
mean the same level of education as another pupil;
• It assumes that all educational years may be treated the same, but the types
and amount of returns from a year in primary school versus a year in a Ph.D.
programme, are very different;
• It does not address whether or not the education being provided is geared
towards the needs of either the student or the economy;
• It does not show the effects of changes in relative versus absolute levels of
education in the country;
• It does not address issues of actual time in school (i.e. losses due to repetition);
• There is no evaluation of continuing education or informal education for adults
already in the workforce;
• It does not examine how higher levels of education in youth versus adults (or, in
some cases, vice versa) will affect the human capital levels in the population;
• It does not address issues of educational inequality (i.e. a small portion of the
population has a very high level of schooling while the rest of the population is
illiterate);
• It does not examine the changing incentives for schooling and the effect this is
having on the overall levels of education.
This is why, in this study, we are looking at a wide range of indicators that will all have
an impact on short- and long-term levels of human capital. The aims of the sections
are as follows:
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TITLE
Human Capital Implications of Future Economic Growth in Cambodia
•
•
•
•
•
•
•
•
•
2.1
The demography section shows the pressures of the changing Cambodian
population on the requirements of the education system and the growing
workforce that will have to be trained.
The section on migration shows how movements of people are changing the
demand for education, which will need to be addressed in the future.
The section on school attendance, repetition, and drop-out rates gives an
empirical analysis of the levels of education being attained today by the younger
Cambodian population.
Quality and levels of education show the overall human capital stock in terms of
years of education in Cambodia, and the estimated usefulness of this stock.
Employment trends show where there is a growing need for education and where
shifts in the Cambodian economy are both reflecting changes in the education
system and putting pressure on it for the future.
The section on the mismatch between education and employment shows how
and where the education system is not properly training its students for the
workforce.
The section on universities and TVET attempts to give an overview of what the
realities of these sectors are in Cambodia today.
Regional variations show how Cambodia ranks compared to other countries in
Asia and ASEAN.
Finally, the challenges section illustrates those areas that are presenting problems
for the realisation of a stronger and larger human capital stock in Cambodia.
Demography
Cambodia’s demography is largely driven by its history over the last four decades.
The civil war and the following Khmer Rouge regime left millions dead and seriously
affected the demographic makeup of the country. With the end of the Khmer Rouge
regime, and with the more stable peace which emerged in the 1990s, the country
experienced two baby booms; one in the 1980s and another in the early 1990s. These
baby booms have given rise to what is considered a ‘youth bulge’ in Cambodia’s
population structure. As these young adults come of age and enter the labour force,
combined with a large drop in the fertility rates since 2000, Cambodia is seeing a rapid
decline in the dependency ratio. Just in the two years between 2005 and 2007, the
ratio dropped 0.5 percent, and the 2005 rate was a 0.4 percent drop from 2000 (Figure
2.1).
This youth bulge, as stated, is leading to a dramatic expansion of the Cambodian labour
force. The population pyramid from 1998 to 2008 shows this youth bulge slowly aging
and reaching working age (Figure 2.2), and these figures are expected to continue to
follow this trend, as well as create a second youth bulge in the coming decade.
The implications for the education system are profound. Such a large bulge can
exacerbate problems of underdevelopment and unemployment if the correct policies
are not undertaken. In 2008 almost 60 percent of the population was under 24-yearsold. This makes it one of the most youthful countries in the ASEAN region, and the
country with the second highest projected labour force growth from 2007 to 2015
with 22 percent, after Lao PDR with 25 percent (Figure 2.3).
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Human Capital Implications of Future Economic Growth in Cambodia
Figure 2.1 Dependency ratio of Cambodia (selected years), percentage of total population
Source: World Bank 2009b, p. 29.
Figure 2.2 Population pyramids of Cambodia
Source: MoP, p. 6.
Figure 2.3 Projected labour force growth in Cambodia 2007-2015 (%)
Source: ILO 2008
UNDP Discussion Paper No. 8
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Human Capital Implications of Future Economic Growth in Cambodia
In order to continue the remarkable growth the Cambodian economy has seen over
the past 10 years, the government will have to ensure that it creates a well-educated,
skilled workforce. Rapid expansion of a skilled, capable workforce can attract FDI
and promote further growth; if the labour market is filled with unskilled workers, the
economy will largely be unable to capitalise on these benefits. Additionally, if a large
population joins the workforce without adequate skills and training, they will be unable
to maintain their employability, creating large numbers of poor and unskilled workers
who will continue to be dependent on the government throughout their economic
lives (World Bank 2010c).
Of course, fostering the creation of a pool of skilled workers is very difficult to achieve
with limited financial resources, creating a need for the government to develop a
comprehensive education plan which takes into account other development factors,
enabling them to avoid the typical poverty trap, which would be sure to scuttle any
effective education plan.
2.2
Migration
Although the population of Cambodia is still largely rural and many Cambodians
have not left their home village, the country has seen increasing amounts of internal
migration in the last decade (Figure 2.4).
Figure 2.4 Percentage of people moving during three time periods,
1980-1993, 1991-1995 and 1999-2003
Source: Morris 2007, p. 77.
According to the Cambodia Socio-Economic Survey (CSES) 2004, there were 4.5 million
migrants, up from 3.6 million in the 1998 survey, and 96 percent of the migration was
internal (ILO 2007).
It is equally striking how high the migration levels for youth are, especially for those
from both sexes in their 20s. In 2004, 17.2 percent of 20- to 24-year-olds migrated (19.5
percent males, 15.0 percent females), and 17.8 percent of 25- to 29-year-olds migrated
(22.9 percent males, 13.0 percent females). Although youth are more mobile than the
older generation, this could still mean much higher levels of migration in the future
(Table 2.1).
Given these growing levels of migration, especially among youth, it is becoming
increasingly important to gain a better understanding of the impact of these
movements on skill development and employment. When moving from rural to
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Human Capital Implications of Future Economic Growth in Cambodia
urban, or undertaking seasonal migration, this is often in search of work, but given the
low levels of education throughout Cambodia (especially in more rural areas), this is
leading to large numbers of low paid, unskilled workers migrating (often to cities) for
work. The failure to utilise these individuals in more productive employment is a loss of
potential, and could increase the potential for social unrest that these large numbers
of dissatisfied workers can lead to. Thus, this migration and mobility is a driving need
for increasing skill portability, and the focus in the future needs to be not only on hard
skills, but increasingly also on soft skills that can be applied to various industries or
sectors, as the demand for labour changes.
Table 2.1 Age-specific five year migration rates by rural-urban residence and sex, 2004
Age
group
Cambodia
Total
Male
Urban
Female
Total
Male
Rural
Female
Total
Male
“Attendance of
primary school
in Cambodia has
increased
significantly over
the last two
decades and is
currently very
high, but drops
off significantly
after the
primary years”
Female
15-19
8.2
7.2
9.2
17.3
14.7
19.7
6.5
5.8
7.1
20-24
17.2
19.5
15.0
28.2
27.9
28.5
14.8
17.8
12.1
25-29
17.8
22.9
13.0
31.6
36.4
27.3
15.1
20.4
10.2
30-34
11.7
14.2
9.5
22.4
25.3
19.6
9.6
12.0
7.5
35-39
8.9
10.9
7.1
16.9
20.0
14.1
7.4
9.1
5.9
All ages
8.3
9.1
7.6
16.4
16.6
16.2
6.9
7.8
6.0
Source: Morris 2007, p. 80.
2.3
School attendance, repetition, and drop-out rates
Attendance of primary school in Cambodia has increased significantly over the last
two decades and is currently very high, but drops off significantly after the primary
years. Figures from 2009-2010 suggest that enrolment for the whole country in primary
school is over 90 percent, and while this varies some from region to region, all are
above 80 percent and most are above 90 percent. Once children graduate to the lower
secondary level (grades 7-9), however, enrolment drops off sharply. For the country as
a whole the figure is slightly above 30 percent, with Phnom Penh topping the list with
55 percent, while some regions are as low as 10 percent (Figure 2.5).
This trend continues throughout the education hierarchy. As Table 2.2 shows, the
enrolment rates for upper secondary are a mere 13 percent. Among young people
aged 15, more than a quarter have stopped attending school, and among 19-yearolds, two-thirds are out of school. Additionally, the majority of people have only
completed between 5 and 7 years of schooling; by 11 years the number has dropped
off significantly (Figure 2.6).
In addition to these low education rates and high drop-out rates, attention should be
paid to the repetition rates in the country. The number of students repeating grades 1
through 6 can be seen in Figure 2.7. While these figures are not exorbitantly high, they
should still be noted. Of more concern is that these rates have actually been increasing
over the last decade, a dangerous trend for the future. Although this repetition is
attributable to various factors (discussed further in the Challenges section), it will be
an important area for the Government to tackle if it wants to improve its citizen’s levels
of education.
UNDP Discussion Paper No. 8
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TITLE
Human Capital Implications of Future Economic Growth in Cambodia
Figure 2.5 Primary and lower secondary net enrolment ratio by province 2009-10
Source: MoP 2010, p. 17.
Table 2.2 Net enrolment/attendance rates in primary, lower secondary,
and upper secondary school by geographical domain and sex, percent (2007)
Cambodia
Women
Men
Total
Net enrolment/attendance rates in primary school by
geographical domain and sex, 2007 (percent)
82
81
82
Net enrolment/attendance rates in lower secondary school
by geographical domain and sex, 2007 (percent)
30
27
29
Net enrolment/attendance rates in upper secondary school
by geographical domain and sex, 2007 (percent)
13
14
13
Source: NIS 2009, p.12.
Thus, despite significant progress, the attendance levels in Cambodia beyond the
primary level are quite poor. It is worth noting why this is the case. Despite the
attention Cambodia has given to education in the past, and despite extremely high
levels of growth that might have been expected to enable the country to increase
levels of education, this growth is actually one of the contributing factors to a lack of
education beyond the primary level for much of the workforce. Sudden high rates of
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Human Capital Implications of Future Economic Growth in Cambodia
growth meant that there was ample opportunity for employment; combining this with
a youthful population that was increasingly mobile, meaning they were able to move
to urban areas where more jobs were available, meant that there was less incentive
to continue with one’s education since one was able to gain employment without
high levels of education. Contributing to this was the fact that the pull factors, the
factories and industries that were doing much of the employing, did not require high
levels of education, again limiting incentives to continue school learning. Finally, due
to the short-term education vision of the Cambodian Government, few efforts were
made to curb this trend, and the education policy focused much more on the shortterm concerns of increasing primary education. Thus, the Government is now faced
with high and sustained drop-out rates, despite high levels of primary education.
This creates a situation where school drop-outs fail to gain the basic education levels
upon which future learning needs to evolve, thus preventing these individuals from
improving their economic situation and both contributing to and gaining from growth
to a greater extent.
“...school
drop-outs
fail to gain
the basic
education levels
upon which
future learning
needs to evolve.”
Figure 2.6 Youth out-of-school status and education (2007)
Source: World Bank 2010c, p. 42.
Figure 2.7 Repeaters in secondary school (all grades total)
Source: UNESCO Institute for Statistics online database
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“The big picture
of education in
Cambodia
is improving
for the new
generation...”
Box 2.1
Stopping school drop-outs through cash transfers
School retention is a matter that has always been given much attention, considering that the
ability of a country to attract and retain students is a significant concern for the robustness of
a country’s education system. In Indonesia, school retention is partially addressed by a project
called the National Programme for Community Empowerment (PNPM), a major initiative that is
occupying the centre stage in poverty reduction policies and practices in Indonesia. This initiative
has already absorbed large amounts of donor and Government attention and funding in recent
years.
PNPM Mandiri, for example, works on basic education providing block grants to 4,000 schools
across the country to improve the quality of the teaching-learning process, using school-based
management approaches. Aims include improving poor child enrolment, improving retention
and learning outcomes for the nine years of basic education, and supporting decentralised school
management and community participation.
Conditional Cash Transfers, promoting school retention and school attendance, were initially
popular in many Latin American countries during the 1990s and have since started to spread to
Asian countries like Indonesia and the Philippines. These programmes consist of transfers in cash
to poor families with children under the condition that they send their children to school and pay
regular visits to health centres.*
Strategies for cash transfers to the poor are not new. They have been used as effective ways to
tackle poverty. By linking these transfers with, for instance, school attendance, improvements in
human capital development can be made, allowing for both short- and long-term poverty alleviation. However, there are areas in the cash transfer scheme which require special attention. These
include: targeting, in order to identify ‘deserving’ beneficiaries; efficient administrative procedures; a realistic assessment of institutional capacities; capability and preparedness in rolling out
such a mechanism (strong monitoring, evaluation and accountability agencies); and long-term
fiscal sustainability. Thus, while these are a potentially useful tool in decreasing school drop-outs
and increasing social services, governments must be careful in their implementation and learn
from the experiences of countries like Indonesia.
*The promulgation of these programmes in Asia is causing some uneasiness among large segments
of civil society. Two of the most common arguments used against CCTs are: 1. people do not want
‘charity’ hand outs, but decent work; and 2. conditions are not applicable when education and health
services lack either quantity or quality, or both.
2.4
Quality and levels of education and training
The big picture of the level of education in Cambodia is improving for the new
generation, although the lack of education of much of the older generation continues
to paint a grim picture of the overall level. The trend has been an increase in education,
although the 2007 CSES showed an increase in the percentage of the adult population
(over 18) who had no schooling at all over the percentage in 2004, and an attendant
drop in the levels of the overall adult population for educational attainment from
primary to tertiary (Figure 2.8).
Despite this, the trend over the last decade or so has been to increase the level of
education attained by the population. There has been a steady increase in the
enrolment ratio over the last decade, indicating that the younger population is able to
get at least some level of education. In primary, lower secondary and upper secondary,
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Human Capital Implications of Future Economic Growth in Cambodia
there has been a constant increase from 1997 until 2007; data is unavailable before
2007 for Tertiary (Figure 2.9). Creating an educational base is the key for improving the
skills of the workforce going forward, and as such these trends are promising for the
future.
Figure 2.8 Educational attainment of the adult population (18 and older), 2004 and 2007
Source: World Bank 2010c, p. 43.
Figure 2.9 Net enrolment ratio (%)
Source: World Bank 2009b, p. 38.
Additionally, these increases in education seem to be having a positive impact on
productivity. GDP growth from 2001 to 2008 can largely be attributed to this increase
in productivity. Over these seven years, real GDP per capita has increased 59 percent;
98 percent of this can be attributed to productivity gains. While about half of these
gains are due to a move by workers into more productive sectors, the other half is
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TITLE
Human Capital Implications of Future Economic Growth in Cambodia
“...the country’s
labour force
has undergone
major changes
in the last
decade.“
attributed to productivity growth within sectors (Figure 2.10). Education can play a key
role in this growth, and efforts should focus on this in the future.
Figure 2.10 Decomposition of GDP growth, 2001-2008
Source: World Bank 2010c, p. 37.
2.5
Employment trends
In order to better understand the impact that human capital development is having on
the growth of the Cambodian economy, it is important to look at employment trends
and the effect that higher levels of education are having on the employability of the
labour force.
First of all, it is important to note that the country’s labour force has undergone
major changes in the last decade. For example, there have been substantial changes
in the labour force employment-to-population ratio. In 1998, the total labour force
participation was 77 percent, with 81.2 percent male and 73.5 percent female. By 2008,
that had changed to 78.3 percent total, with 80.8 percent male and 76.0 percent female.
As male labour force participation rates often decline when male youths increase their
school attendance or stay in school longer, it is interesting to note that the percentage
of men working only declined by 0.4 percent during the 10 year time span. On the
other hand, the increase in the employed female population by 3 percentage points
may be attributed to various factors, such as increased job opportunities for women,
increased social acceptance of female employment, or an increased willingness of
firms to hire female workers. However, as much of this employment is in the garments
sector (see Chapter 3), it does not necessarily point to higher education levels among
women (Figure 2.11 and Table 2.3).
Figure 2.11 Labour force participation rate, for workers aged 15 and older (%)
Source: ILO 2010b, p. 19.
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A second important trend has been the increased level of education in the workforce.
Given the government’s investment in increasing primary education, this is the
expected outcome. From the 1998 figure of 32.9 percent, the percentage of people of
both sexes over 15 in the workforce who were illiterate declined by 8.6 percent to 24.3
percent. The drop among females was even larger, from 43.7 percent to 30.9 percent
over the same time period. The overall number of workers who had completed primary
level education jumped from 17.2 percent to 23.0 percent (and among 15-24-yearolds, the jump was from 20.0 percent to 31.8 percent).
Again, this reflects the commitment that has been made to increasing primary
education among the population. However, the challenges that are faced by the
population in terms of achieving higher levels of education than primary are also
obvious. From 1998 to 2008, the percentage of the population that had completed
secondary education dropped from 2.4 percent to 1.5 percent, although completion
of lower secondary rose from 7.2 to 13.7 percent (Table 2.4).
Knowing that these levels of education have increased, can one see any identifiable
effect this is having on the makeup of the economy? While there are obviously many
factors that lead to a change in the makeup of a country’s economy, there are noticeable
changes taking place. First of all, in terms of skill shift there has been a shift in sector
involvement in employment. The proportion of the population in the primary sectors
(agriculture, fishing, and extractive industries) has declined over the past decade, while
the proportions in secondary (manufacturing) and tertiary (services and sales) have
increased. In 1998, employment in the primary, secondary, and tertiary sectors were
77.0, 4.2, and 18.3 percent respectively for both sexes 15 and over, while in 2008 the
figures were 72.1, 8.6, and 19.3, respectively (Table 2.5). This means that employment
sources are slowly diversifying and workers are developing more than the basic skills
needed for the primary sector.
Second, this shift can also be seen in the investment dispersion from 2006 to 2008.
While in 2006 agriculture had 20 investment projects and 35.7 percent of labour
demand, in 2008 it only had 5 projects and 2.8 percent of labour demand. In contrast,
industry had 61 projects and 57.1 percent and services had 17 projects and 7.2 percent
in 2006, while in 2008 they had 66 projects and 57.4 percent, and 27 projects and 39.8
percent, respectively (Table 2.6).
Third, it can be seen that there has been a decrease in vulnerable employment.
Vulnerable employment can be defined as unpaid family workers and own-account
workers. While the proportion is still very high, and while the absolute number
increased from 1998, by 2008 the proportional figure had declined from 86.8 percent
to 82.5 percent, and there was a larger drop for females, from 93.1 to 85.9 percent
(Figure 2.12).
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TITLE
Human Capital Implications of Future Economic Growth in Cambodia
Table 2.3 Labour force and labour force participation rate (%)
Age group
1998
2000
2001
2008
Both sexes
5,038,382
5,278,956
6,007,406
6,955,640
15-24
1,268,671
1,649,728
2,085,526
1,796,785
25-34
1,489,631
1,220,233
1,291,148
1,759,531
35-44
1,080,119
1,128,499
1,196,778
1,476,944
45-54
651,613
782,125
851,614
1,048,172
55-64
364,127
371,270
422,115
562,728
65+
184,221
127,101
160,225
311,480
Male
2,443,580
2,529,755
2,878,362
3,396,449
15-24
572,862
751,707
983,914
858,191
25-34
769,547
602,908
647,397
897,833
35-44
516,781
551,771
565,881
740,697
45-54
301,151
350,470
371,657
483,132
55-64
180,297
195,479
210,971
259,140
65+
102,942
77,420
98,542
157,456
2,594,802
2,749,201
3,129,044
3,559,191
15-24
695,809
898,021
1,101,612
938,594
Female
25-34
720,084
617,325
643,751
861,698
35-44
563,338
576,728
630,897
736,247
45-54
350,462
431,655
479,957
565,040
55-64
183,830
175,791
211,144
303,588
81,279
49,681
61,683
154,024
65+
Labour force to population (%)
Both sexes
77.0
78.4
83.3
78.3
15-24
60.7
67.7
76.7
60.1
25-34
89.1
90.5
93.6
91.3
35-44
90.5
92.9
94.5
93.3
45-54
89.5
90.6
93.1
91.6
55-64
78.8
77.3
80.6
84.1
65+
46.6
32.6
39.0
54.5
Male
81.2
80.8
85.1
80.8
15-24
56.3
63.3
73.6
57.1
25-34
96.5
96.9
97.3
95.4
35-44
98.4
97.8
98.8
98.4
45-54
97.9
96.6
98.0
97.6
55-64
91.6
86.7
88.7
92.9
65+
62.6
46.0
52.1
68.4
Female
73.5
76.3
81.6
76.0
15-24
64.9
71.8
79.7
63.2
25-34
82.4
85.0
90.2
87.4
35-44
84.3
88.7
91.0
88.7
45-54
83.3
86.3
89.6
87.0
55-64
69.3
68.9
73.9
77.9
65+
35.2
22.4
27.8
45.2
Source: ILO 2010b, p. 67.
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Table 2.4 Employment by completed educational level and sex
1998
15+
Both sexes
Illiterate
No class completed
2008
15-24
25+
15+
15-24
25+
4,773,488
1,114,189
3,659,299
6,841,272
1,736,962
5,104,310
1,572,554
327,833
1,244,721
1,662,308
306,298
1,356,010
51,946
6,973
44,973
133,984
28,869
105,115
1,842,486
478,600
1,363,886
2,359,867
577,267
1,782,600
Primary completed
820,636
223,286
597,350
1,570,424
552,197
1,018,227
Lower secondary
344,767
59,327
285,440
936,296
242,463
693,833
Secondary/diploma
115,337
15,949
99,388
99,822
18,190
81,632
Beyond secondary
19,239
1,470
17,769
74,000
11,127
62,873
3,236
205
3,031
4,162
450
3,712
Primary not completed
Other
Not reported
3,287
546
2,741
409
101
308
2,330,301
502,134
1,828,167
3,345,926
828,975
2,516,951
506,046
121,841
384,205
580,503
129,799
450,704
29,352
3,491
25,861
60,585
14,125
46,460
Primary not completed
920,636
211,624
709,012
1,098,498
271,227
827,271
Primary completed
533,801
117,681
416,120
881,102
264,014
617,088
Lower secondary
Male
Illiterate
No class completed
234,948
35,642
199,306
600,436
134,125
466,311
Secondary/diploma
85,611
10,332
75,279
67,691
9,433
58,258
Beyond secondary
15,117
1,015
14,102
53,856
5,877
47,979
Other
2,653
171
2,482
2,986
304
2,682
Not reported
2,137
337
1,800
269
71
198
Female
2,443,187
612,055
1,831,132
3,495,346
907,987
2,587,359
Illiterate
1,066,508
205,992
860,516
1,081,805
176,499
905,306
22,594
3,482
19,112
73,399
14,744
58,655
Primary not completed
No class completed
921,850
266,976
654,874
1,261,369
306,040
955,329
Primary completed
286,835
105,605
181,230
689,322
288,183
401,139
Lower secondary
109,819
23,685
86,134
335,860
108,338
227,522
Secondary/diploma
29,726
5,617
24,109
32,131
8,757
23,374
Beyond secondary
4,122
455
3,667
20,144
5,250
14,894
Other
Not reported
583
34
549
1,176
146
1,030
1,150
209
941
140
30
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Human Capital Implications of Future Economic Growth in Cambodia
“...labour
productivity
has increased
for almost
all industries
over the last
decade.”
Table 2.4 Employment by completed educational level and sex (continued)
1998
15+
2008
15-24
25+
15+
15-24
25+
Percentage
Both sexes
Illiterate
No class completed
100.0
100.0
100.0
100.0
100.0
100.0
32.9
29.4
34.0
24.3
17.6
26.6
1.1
0.6
1.2
2.0
1.7
2.1
Primary not completed
38.6
43.0
37.3
34.5
33.2
34.9
Primary completed
17.2
20.0
16.3
23.0
31.8
19.9
Lower secondary
7.2
5.3
7.8
13.7
14.0
13.6
Secondary/diploma
2.4
1.4
2.7
1.5
1.0
1.6
Beyond secondary
0.4
0.1
0.5
1.1
0.6
1.2
Other
0.1
0.0
0.1
0.1
0.0
0.1
Not reported
0.1
0.0
0.1
0.0
0.0
0.0
100.0
100.0
100.0
100.0
100.0
100.0
21.7
24.3
21.0
17.3
15.7
17.9
1.3
0.7
1.4
1.8
1.7
1.8
Primary not completed
39.5
42.1
38.8
32.8
32.7
32.9
Primary completed
22.9
23.4
22.8
26.3
31.8
24.5
Lower secondary
Male
Illiterate
No class completed
10.1
7.1
10.9
17.9
16.2
18.5
Secondary/diploma
3.7
2.1
4.1
2.0
1.1
2.3
Beyond secondary
0.6
0.2
0.8
1.6
0.7
1.9
Other
0.1
0.0
0.1
0.1
0.0
0.1
Not reported
0.1
0.1
0.1
0.0
0.0
0.0
Female
100.0
100.0
100.0
100.0
100.0
100.0
Illiterate
43.7
33.7
47.0
30.9
19.4
35.0
0.9
0.6
1.0
2.1
1.6
2.3
Primary not completed
37.7
43.6
35.8
36.1
33.7
36.9
Primary completed
11.7
17.3
9.9
19.7
31.7
15.5
Lower secondary
4.5
3.9
4.7
9.6
11.9
8.8
Secondary/diploma
1.2
0.9
1.3
0.9
1.0
0.9
Beyond secondary
0.2
0.1
0.2
0.6
0.6
0.6
Other
0.0
0.0
0.0
0.0
0.0
0.0
Not reported
0.0
0.0
0.1
0.0
0.0
0.0
No class completed
Source: ILO 2010b, p. 67.
Fourth, it can be seen that labour productivity has increased for almost all industries
over the last decade. This increase in labour productivity, as defined by the value added
per person employed, was most impressive for mining and quarrying, with an annual
growth of 19.4 percent (according to the change in the riel value of output), followed
by finance and other services, with 8.6 percent, and transport and communications,
with 5.8 percent. The only sector to see a decline in productivity was electricity, gas and
water, with -3.9 percent average annual growth (Table 2.7). However, it is important to
note that despite this rise in productivity, the overall employee output level is low
compared to other ASEAN countries (Figure 2.13). If Cambodia is to remain competitive
with ASEAN countries, especially in the aftermath of the global economic crisis, it will
have to further improve its worker productivity.
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UNDP Discussion Paper No. 8
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Table 2.5 Employment by sector, age and sex
1998
15+
Both sexes
Primary sector
Secondary sector
Tertiary sector
Not reported
2008
15-24
25+
15+
15-24
25+
4,773,488
1,114,189
3,659,299
6,841,272
1,736,962
5,104,310
77.0
79.1
76.4
72.1
68.6
73.3
4.2
6.5
3.5
8.6
15.5
6.2
18.3
13.7
19.7
19.3
15.9
20.5
0.4
0.7
0.4
0.0
0.0
0.0
Total
100.0
100.0
100.0
100.0
100.0
100.0
Male
2,330,301
502,134
1,828,167
3,345,926
828,975
2,516,951
71.1
75.7
69.8
69.2
70.6
68.7
5.0
6.2
4.7
8.1
11.9
6.9
Tertiary sector
23.4
17.2
25.1
22.7
17.5
24.4
Not reported
0.5
0.8
0.4
0.0
0.0
0.0
Primary sector
Secondary sector
Total
Female
Primary sector
Secondary sector
Tertiary sector
Not reported
Total
100.0
100.0
100.0
100.0
100.0
100.0
2,443,187
612,055
1,831,132
3,495,346
907,987
2,587,359
82.7
81.9
82.9
75.0
66.9
77.8
3.5
6.8
2.4
9.0
18.7
5.6
13.5
10.8
14.3
16.0
14.4
16.6
0.4
0.5
0.4
0.0
0.0
0.0
100.0
100.0
100.0
100.0
100.0
100.0
Source: ILO 2010b, p. 23.
Table 2.6 Labour demand through investment projects, by sectors, 2008
Sector
Labour
%
No. of projects
2008
Agriculture
Industry
Services
4,729
2.8
5
98,583
57.4
66
68,398
39.8
27
171,710
100.0
98
2,198
3.7
3
Industry
52,761
89.0
36
Services
4,355
7.3
8
59,314
100.0
47
68,367
35.7
20
Industry
109,344
57.1
61
Services
13,851
7.2
17
191,562
100.0
98
Total
2007
Agriculture
Total
2006
Agriculture
Total
Source: ILO 2010b, p. 30.
UNDP Discussion Paper No. 8
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Human Capital Implications of Future Economic Growth in Cambodia
Table 2.7 Labour productivity, by industry
(value added per person employed, in constant 2000 value)
Sector
1998
2008
Average annual growth (%)
(thousand riel)
US$
(thousand riel)
(US$)
riel
US$
2,380
631
4190
1030
5.7%
4.9%
Total
Agriculture, forestry and fisheries
1,294
343
1,537
378
1.7%
1.0%
Mining and quarrying
3,637
964
25,341
6,229
19.4%
18.7%
Manufacturing
Electricity, gas and water
Construction
Trade
Hotels and restaurants
9,735
2,580
13,339
3,279
3.1%
2.4%
15,849
4,200
10,695
2,629
-3.9%
-4.7%
9,337
2,474
13,553
3,332
3.7%
3.0%
4,156
1,101
4,598
1,130
1.0%
0.3%
24,378
6,460
22,068
5,425
-1.0%
-1.7%
Transport and communications
6,042
1,601
10,824
2,661
5.8%
5.1%
Finance and other services
4,292
1,137
10,096
2,482
8.6%
7.8%
Source: ILO 2010b, p. 31.
Figure 2.12 Proportion of vulnerable employment within all employment
Source: ILO 2010b, p. 25.
Figure 2.13 Output per worker, by selected ASEAN countries, 2008 (constant 2009 US$)
Source: ILO 2010b, p. 31.
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UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
2.6
Mismatch between education and employment
One of the most important aspects of education is that it creates a workforce which
is skilled and able to create returns on that education for them and for the overall
economy when they enter their careers. Thus, the educational system must be attuned
to the needs and necessities of the economy, and work towards preparing students
for their economic lives. One of the major problems in Cambodia is that there do not
seem to be strong returns on education and/or training for the population in terms of
employment and work advancement. In Cambodia, the listed unemployment rate is
actually quite low (in 2007, 0.9 percent according to the strict definition – unemployed
and actively looking for work – and 3.82 percent by the relaxed definition – unemployed
and available for work but not actively looking) (SNEC 2009). However, this is because
many are forced to find some kind of employment rather than having no income at
all, given the lack of unemployment aid schemes. The problem, however, is that often
the quality and pay of these jobs are low or inadequate given one’s qualifications.
Whether the cause or effect of this is low education levels is a chicken and egg problem
– the important factor, however, is that the low returns on education are limiting the
incentives to attain higher than the most basic levels of education.
“One of the most
important
aspects of
education is
that it creates a
workforce which
is skilled and
able to create
returns on that
education...”
The nature of the Cambodian economy is not helping this trend. A large proportion of
the workforce works in informal economic activities, either self-employed or working
as an unpaid family worker (Table 2.8).
Table 2.8 Employment status of population aged 10+ years, 2004 and 2007 (percent)
2004
2007
Total
Male
Female
Total
Male
Female
Employee
20
23.3
16.6
23.3
26.9
19.5
Employer
0.1
0.1
0.1
0.1
0.1
0.03
Own account worker
34.4
39.7
28.8
35.8
43.1
28.2
Unpaid family worker
43.3
34.8
52
40.7
29.8
52.3
Source: SNEC 2009, p. 12.
Formal sector employment, despite growth, remains small, with paid employees
accounting for only 23.3 percent of the overall workforce. Another detracting factor
is the lack of average wage increases based on increased schooling. While of course
it must be taken into account that the average income in Cambodia is quite small,
the increase in wage per month for several more years of schooling provides little
incentive to continue with an education. In 2007, the average wage for someone
who had completed primary school was US$58.14/month; for someone who had
completed lower secondary school, it was US$61.35/month. For an extra three years of
schooling, one can expect only a US$3.21 increase per month. The difference between
lower secondary and upper secondary is even smaller – an increase of only US$0.82
to US$62.17, for an extra 3 years of schooling. While the increases for a vocational/
technical or a university degree are considerably larger, there is a large disincentive to
reach this level of schooling (Table 2.9).
UNDP Discussion Paper No. 8
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Human Capital Implications of Future Economic Growth in Cambodia
Table 2.9 Average earning by education level for youth (US$/month)
Education levels
None
Male
-
Female
Both sexes
-
37.5
Primary school
56.23
59.82
58.14
Lower secondary school
61.70
61.03
61.35
Upper secondary school
59.19
65.79
62.17
Technical/vocational
149.71
75.60
95.02
College/university undergraduate
135.53
103.02
115.55
Bachelor’s degree
150.78
129.59
141.74
Source: NIS 2007
And as Figure 2.14 shows, increase in education does not seem to have a significant
impact on income when organised based on wealth band – it is only significant for
the top 10 percent of the wealthiest individuals in Cambodia. Up to the 75 percentile,
and to some extent in the 75-90 percentile, there is essentially no appreciable increase
in hourly wage. It is also significant that while wages have increased steadily over the
last decade due to the country’s impressive economic growth, this increase has been
uneven. The top 10 percent of the population in terms of wealth distribution have seen
a 90 percent increase in their earnings, while the bottom 10 percent have only had a 40
percent increase (World Bank 2009a).
Figure 2.14 Education makes little difference to earnings, except for the richest group
Source: World Bank 2009b, p. 31.
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UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
2.7 Universities and technical and vocational education
and training in Cambodia
The state of the higher education system in Cambodia, consisting of both university
education and vocational and technical training, is characterised by very disparate
organisation mechanisms, poor quality output, and low enrolment. These three factors
are greatly inhibiting the development of higher education and more capable human
capital in the country, and should be a major concentration point when undertaking
reforms.
To begin with, we can look at the state of the university system in Cambodia. A total
of eleven ministries and agencies provide higher education services, and thus have
access to the public education budgets of Cambodia. Two of the most important
ministries regarding higher education are the Ministry of Education, Youth and Sport
(MoEYS) and the Ministry of Labour and Vocational Training (MoLVT), and while the
Cambodian Education Law states that MoEYS is responsible for general, higher and
vocational education, it does not provide any explanation for the role of MoLVT,
which has resulted in a high level of competition, and difficulties in developing strong
cooperation links between these Ministries. Understandably, this makes coordination
of the higher education system very difficult for the government, something that will
be examined in greater detail in Chapter 4.
“...the majority
of higher
education
institutes are in
Phnom Penh,
although there
is a growth
of other
institutions...in
various
other provinces.”
It should also be noted that the majority of higher education institutions are in Phnom
Penh, although there is a growth of other institutions, mainly private, in various other
provinces (Figure 2.15).
Figure 2.15 Location of universities in Cambodia
Source: MoEYS data.
As for the areas of study that are popular among Cambodian university students, the
most common areas of study are foreign languages (14.5 percent average from 2006 to
2009), management (13.1 percent), accounting (10.4 percent), and computer science
UNDP Discussion Paper No. 8
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(7.9 percent) (Table 2.10). However, it should be noted that in most cases, students
graduating from university with degrees in management, accounting, and business
administration were found to be lacking in the essential skills and practical experience
required for employment in the field for which they were supposed to be qualified.
This points to the huge technical problems these universities face in terms of creating
learning institutions which make an education worthwhile and which are geared
towards the needs of the market. We can also see from Table 2.10 that the absolute
enrolment numbers are very low. These demand issues will be addressed in part later
on in this chapter. Overcoming some of these issues and ensuring that students are
retained throughout the education cycle will be absolutely essential to improving the
level of human capital in Cambodia.
Turning now to technical and vocational education and training (TVET), we see that
many of the same coordination, quality, and participation problems exist. Currently,
TVET is controlled by the NTB. It has direct responsibility for advancing the status of
TVET and turning it into a demand-driven system which is responsive to the needs of
the economy. As for the focus of TVET, the Directorate General has in the past focused
on the competency-based approach to skills training, attempting to ensure that the
knowledge, skills, and attitudes that individuals will require to carry out particular jobs
are obtained.
Table 2.10Total enrolments by study discipline
in public and private higher education institutions
Study discipline
2006-2007
%
2007-2008
%
2008-2009
%
Three-year
average
(%)
2007-2009
Mathematics, chemistry, physics, biology
1,679
1.8%
2,562
2.3%
3,073
2.2%
2.1%
Foundation year
2,038
2.2%
4,707
4.3%
4,561
3.3%
3.3%
Computer science
8,149
8.8%
8,769
8.0%
9,523
6.9%
7.9%
Sociology, humanities, arts
5,172
5.6%
6,968
6.3%
8,685
6.3%
6.1%
Tourism
Foreign languages
3,361
3.6%
3,190
2.9%
2,999
2.2%
2.9%
15,200
16.5%
15,797
14.3%
17,370
12.7%
14.5%
Law
4,554
4.9%
5,718
5.2%
7,484
5.5%
5.2%
Health sciences
5,341
5.8%
5,411
4.9%
7,817
5.7%
5.5%
Agriculture and rural development
3,745
4.1%
3,713
3.4%
5,288
3.9%
3.8%
Engineering and mechanical
2,870
3.1%
3,349
3.0%
4,719
3.4%
3.2%
52,109
58%
60,184
55%
71,519
52%
54%
7,265
7.9%
7,669
7.0%
10,846
7.9%
7.6%
Sub-total (1)
Business management
• Business
• Marketing
842
0.9%
1,329
1.2%
1,610
1.2%
1.1%
13,445
14.6%
13,657
12.4%
16,768
12.2%
13.1%
• Banking and finance
1,122
1.2%
1,575
1.4%
3,541
2.6%
1.7%
• Economics
5,653
6.1%
6,262
5.7%
8,729
6.4%
6.1%
• Accounting
8,163
8.8%
12,161
11.0%
15,482
11.3%
10.4%
• Finance
3,741
4.1%
7,253
6.6%
8,758
6.4%
5.7%
• Management
Sub-total (2)
40,231
44%
49,906
45%
65,734
48%
46%
Grand total (1) + (2)
92,340
100%
110,090
100%
137,253
100%
100%
Source: HR, Inc. 2010
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UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
Despite this focus and the sector’s coordination under the NTB, this area of education
still faces various issues in terms of coordination of funding and institutions offering
services. Out of 316 TVET institutions in Cambodia over the 2008-2009 school year, there
were 38 MoLVT-run public institutions, 21 public institutions run by other ministries,
181 private TVET institutions, and 76 NGO-run TVET institutions. Historically, TVET has
also received funding from a number of sources, and while this has been condensed in
recent years through greater funding by international donor agencies, there is little or
no coordination between the different donors in order to streamline the process (there
will be more on this in Chapter 5).
“...Cambodia
needs to ensure
that as it grows
it is not falling
behind its
neighbours and
missing out
on growth
opportunities
in the future.”
As we can see from Table 2.11, TVET in Cambodia also faces similar problems to
university education in terms of low enrolment levels. While the numbers have grown
over the last half-decade, for a population of over 14 million people, these numbers
are incredibly low and will definitely need to be increased if any reform of the TVET
system is have a measurable effect.
Table 2.11Enrolment figures for higher education and TVET in Cambodia
Level of training
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
Bachelor’s degree (4 years)
1,041
1,126
1,158
1,408
1,330
1,981
Associate degree (2 years)
1,237
2,201
2,172
3,151
2,959
3,308
Vocational training certificate 1,2,3
(from grades 10-12)
594
503
1,562
1,524
1,214
746
Vocational training certificate (less
than 1 year/informal)
10,692
17,722
64,970
67,178
117,240
66,695
Training at private institutes and
NGOs
14,330
26,434
18,505
40,387
45,887
47,447
Source: data from MoLVT
2.8 Regional variations
It is important to look at Cambodia in reference to other countries in the region,
especially considering that they have similar economic growth backgrounds, and
in many areas, such as tourism and garments, are competing against each other to
attract investors. Because of this Cambodia needs to ensure that as it grows it is not
falling behind its neighbours and missing out on growth opportunities in the future.
Compared to other ASEAN nations, Cambodia is at the bottom of the list. When
comparing enrolment in primary education, Cambodia is doing quite well; however,
moving on to secondary and tertiary education, Cambodia is last in both categories. In
terms of secondary level gross enrolment ratios, Cambodia is only 4 points behind Lao
PDR; but 57 points behind Brunei and 43 behind the Philippines and Thailand, which
rank first, second and third. Its performance at the tertiary level is even worse (Table
2.12).
UNDP Discussion Paper No. 8
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Table 2.12Gross enrolment ratio in primary, secondary and tertiary education
(comparison among ASEAN countries)
Primary
Secondary
Tertiary
Country
2000
2007
2000
2007
2000
2007
Cambodia
102%
119%
18%
40%
2%
5%
Indonesia
109%
117%
55%
73%
14%
17%
Philippines
112%
109%
77%
83%
30%
28%
Malaysia
97%
98%
65%
69%
26%
30%
Singapore
N/A
N/A
N/A
N/A
N/A
N/A
Myanmar
Brunei
N/A
N/A
N/A
N/A
N/A
N/A
111%
106%
85%
97%
13%
15%
Thailand
106%
104%
67%
83%
35%
48%
Lao PDR
109%
118%
35%
44%
3%
12%
Viet Nam
106%
N/A
65%
N/A
9%
N/A
Source: UNESCO Institute for Statistics online database
The returns on education are lower in Cambodia than many other parts of ASEAN as
well. In terms of returns on primary education, Cambodia performs similarly to the
Philippines but worse than Indonesia and Thailand. However, it is significant that in
the other three countries, most individuals continue on to higher levels of education,
meaning that returns are expected to be higher, while in Cambodia, a large portion
of the population will not go on to more schooling. Returns on secondary education
are again similar to the Philippines, but much further behind Indonesia and Thailand.
When looking at tertiary education, the picture is even more grim, with Cambodia
falling far behind all of the other three (Figure 2.16). Thus, other countries seem to
be more successful in realising an employment market which rewards individuals for
increasing their schooling, while Cambodia has not. This will have implications for the
number of students who choose to continue their education in the future, which will in
turn have effects on the skill level and productivity of the work force, which has effects
on the level of growth for the country.
2.9 Current and future challenges
The realities of the Cambodian educational system and labour/employment market
create considerable constraints on the growth and development of the Cambodian
education system, and thus the human capital levels in Cambodia. While some of
these challenges and constraints have been alluded to above, they will be explored in
greater detail here.
The major problems that the country’s education system faces can be broken into two
areas: demand side problems (the unwillingness or inability of Cambodian citizens to
attend school) and supply side problems (the inability or inefficiencies caused by the
Cambodian government and education system in delivering educational resources).
Since supply side constraints will be focused on in greater detail in Chapter 4, here we
will focus only on the demand-side constraints.
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UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
Figure 2.16 Returns to age and education in East Asia, 2004
“...demand side
constraints
pose a serious
hurdle over
which
development of
human capital
and the
education sector
must jump.”
Source: World Bank 2010c, p. 45.
These demand-side constraints pose a serious hurdle over which development of
human capital and the education sector must jump. Many of the concerns of the
Cambodian population are summed up in Table 2.13, which lists the reasons for not
attending school among people aged 5-24. Ranking in the top are ‘Don’t want to’ (23
percent), ‘Must contribute to household chores’ (16 percent), and ‘Must contribute to
household income’ (15 percent). As might be expected, these are indicative of some of
the major constraints on the demand side.
Table 2.13Reason for not attending school among persons 5-17 years of age who are not
attending school by sex, 2007 (percent)
Reason
Men
Women
Total
21
26
23
Did not do well in school
6
8
7
No suitable school available/school is too far
9
7
8
No teacher/supplies
1
1
1
Don’t want to
High cost of schooling/no money
0
0
0
Must contribute to household income
16
15
15
Must help with household chores
18
13
16
6
3
5
Due to disability
Other
25
27
26
Total
100
100
100
Source: NIS 2009, p. 14.
The highest response, ‘Don’t want to,’ can in part be attributed to the employment
availability and return on education rates available to graduates of increasingly
higher levels of education. It was discussed above that wage rates do not significantly
increase based on higher levels of education, as well as the fact that there are not large
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returns on education when compared to other countries of the region. This is certainly
factored into an individual’s calculations as to the economic soundness of continuing
their education.
Compounding this are some of the realities of the workforce in Cambodia. First
of all, there is a very low level of formal work in Cambodia – only about one in five
workers is a paid employee. And these jobs often do not pay enough – 27 percent of
professionals, one-fourth of legislators, officials and managers, and a large number of
civil servants have more than one job (ILO 2007). Many Cambodians are self-employed
or family employed (see Figure 2.15), which means they are not as concerned with
‘skilling-up’ in order to attain career advancement. This also means (in the case of
family employment) that it is often not the person most skilled for the job, but rather
the person that is related to the business owner, that gets the job, again reducing the
incentive to increase training and education. Seasonal and migrant workers also have
less incentive to join a training programme or increase their education because of the
transitory nature of their work. There is also little incentive because of the perceived
returns that education provides. For example, in the garment industry, which is one of
the major work providers for women in Cambodia, there is little incentive to increase
training because there is little or no room for career advancement or promotion to
higher, managerial positions. And finally, incentives decrease because of the low base
level from which training may begin. When an individual has dropped out of school at
a very low education level, they may not have the literacy or basic skills necessary to
participate successfully in a training programme.
Regarding the ‘Must help with household chores’ and ‘Must contribute to household
income’ responses, this is indicative of the poverty constraints that reduce participation
in education programmes. Often, families are too poor to send their children to school.
Or the children must stay at home and do chores or look after younger siblings, while
both parents work. Also, as children get slightly older, they must give up their schooling
to help contribute to the family income as well. Thus, the opportunity cost of gaining a
higher education is too great, and the future returns are not high enough to justify the
investment. The government must look for ways to overcome these poverty constraints
and convince Cambodians that sending their children to school and keeping them
there is an economically wise decision (see Box 2.1 on cash transfers for education).
These challenges are considerable roadblocks to attaining higher levels of education
in Cambodia. Both from the supply and the demand sides, these issues must be
addressed before Cambodia is able to grow its stock of human capital.
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III.
INDUSTRIAL DIVERSIFICATION
AND HUMAN CAPITAL DEFICITS
3.1 Background
The majority of workers, at almost all levels, lack appropriate knowledge and skills
to work effectively in a rapidly changing, complex and volatile environment. Most of
the knowledge acquired in schools by professionals and non-professionals does not
match the demands of industry and the work place. Responding to the human capital
deficit in Cambodia therefore is essential. One must look to the reasons this shortage
has developed in order to shape a strong strategy to overcome it.
“Most of the
knowledge
acquired in
schools by
professionals
and
non-professionals
does not match
the demands of
industry and the
work place.”
This chapter of the report will look at the concept of the human capital deficit in the
macroeconomic context of Cambodia, by reviewing industrial diversification and
evaluating sector-by-sector the human capital deficits and knowledge gaps in the
major Cambodian industries.
3.1.1 Human capital deficit
Primary resources or cheap and unskilled labour are no longer sufficient for Cambodia,
particularly for a long-term vision where strong local capabilities, institutions and
industries are needed. In Cambodia, as in other countries, advancing competitiveness
means identifying the determinants of global competitiveness against the backdrop
of Cambodia’s current human capital deficits.
There is a growing conviction that the dependence that Cambodia has developed
on a few high performing sectors such as garments, construction and tourism is no
longer sustainable and the country needs to broaden its sources of growth through
increased competitiveness and diversification into new products and markets.
Changing determinants of global competitiveness are increasingly shaping the future
with ideas that have strong policy implications for Cambodia. These changes need to
be understood with the increasing demand for new skills to manage technical change,
and strong reforms are needed to re-structure education and training.
While labour regulations are not a problem for most firms, skills are one of the biggest
concerns. According to a 2009 International Finance Corporation (IFC)/World Bank
report (World Bank 2009c), despite the fact that there has been a general increase
in the level of education over the past 10 years, the levels are still very low, and the
demand for skills will continue to increase. The short-term approach of firms in
Cambodia has been to rapidly respond through quickly increasing the provision of
training to their employees; yet the effectiveness of such an approach, which relies on
internal training, is perhaps low and leads to market failure in providing the relevant
training for employees in the private sector (World Bank 2009c).
Furthermore, labour remains in excessive supply and wages remain low, producing
a labour market rationale that holds many features of a low income country, despite
labour being a key asset and not a major constraint to economic growth. According
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“Formal
employers in
construction,
garments and
hospitality affirm
that, at all
qualification
levels, good soft
skills are more
difficult
to find than
technical skills.“
to the World Bank and IFC, the current human capital deficits that are becoming more
pressing include:
1. Level of skills is poor and poorly adapted to new demands from the private sector
and the markets for skills have many market failures.
2. Pay practices are not sufficiently supportive of productivity improvements.
3. In the garment sector, poor industrial relations have become a major detriment to
productivity and morale.
3.2 Addressing the skills gap
Skills are an important determinant of economic performance, given that they raise an
individual’s productivity. Specifically, it is becoming crucial to address gaps in soft skills
in Cambodia, including commitment, communication, creativity, decision-making,
problem solving, self motivation and teamwork. The World Bank (2006) defined soft
skills as thinking skills, both critical and creative, and behavioural skills, including
perseverance, self discipline and teamwork. Most of the recent literature on human
capital emphasises the importance of such skills, both in the process of human capital
development and a determinant of schooling and employment outcomes. Some of
the above soft skills (i.e. punctuality or teamwork) can be learned on the job. But other
skills are best learned in institutional settings, such as schools and training centres.
Employers identify soft skills in Cambodia as the most important skills lacking in most
employees (CAMFEBA 2008), in particular among out of school youth, with 89 percent
of employers’ stating that they have difficulties working with out of school youth
because of behavioural issues.
Furthermore, soft skills are complemented by hard skills, technical abilities which tend
to be specific to a certain task or activity. Examples of hard and technical skills include
machine operation and computer literacy. Lack of soft skills is a major challenge, but
poor technical skills that do not match employers’ needs also represent an obstacle to
productivity growth.
Formal employers in construction, garments and hospitality affirm that, at all
qualification levels, good soft skills are more difficult to find than technical skills. For
unskilled workers, 52 percent of employers identify work attitude as the top skill that
is lacking, followed by a foreign language, with technical skills coming in third (World
Bank 2010a).
Definitions of unskilled, semi-skilled and skilled workers can be summarised:
• Unskilled: an unskilled employee is one who does operations that involve
the performance of simple duties, which require the exercise of little of no
independent judgment or previous experience, although familiarity with the
occupational environment is necessary.
• Semi-skilled: A semi-skilled worker is one who does work generally of a defined
routine nature wherein the major requirement is not so much judgment, but for
the proper discharge of duties assigned to him, or where important decisions
are made by others. The work is thus limited to the performance of routine
operations of limited scope.
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• Skilled: A skilled employee is one who is capable of working efficiently, exercising
considerable independent judgement and discharging duties with responsibility.
The worker must possess a thorough and comprehensive knowledge of the
trade, craft or industry in which he is employed.
3.2.1 Training for employment
3.2.1.1 Vocational training
“Formal and
informal
vocational
training
programmes
do not always
address the
needs of the labour market.”
Included in the National Strategic Development Plan (NSDP) 2006-2010, MoLVT created
the first 5-Year Development Plan 2006-2010, approved by the NTB. The strategy
includes four strategic objectives: employment creation; ensuring better working
conditions; promoting enforcement of the law on social security; and developing
capacity building on technical and vocational skills.
TVET is offered by most public institutions. The formal system is managed by MoLVT,
and provides those completing a three-year programme of upper secondary education
the opportunity to take part in a two-year programme to obtain a diploma, a four-year
Bachelor’s, or a Master’s degree in technology and/or business. According to MoLVT,
the number of technical vocational education and training graduates increased from
88,367 in 2007 to 113,648 in 2008 (ILO 2010b).
3.2.1.2 Formal training
A fair number of firms, from 40 to 60 percent of the total, rely in addition to on-the-job
training and externally provided training. Some firms, particularly in the hospitality
sector, where most providers continuously need to deal with international customers,
have also set up internal training units to upgrade services.
The variety of training provided by employers reflects the need to cover a variety of
basic skill gaps present in many individuals. Furthermore, high turnover impacts firms’
incentives to invest in workers. In 2007, 17 percent of workers in all sectors were new
employees and 11 percent left the company by the end of the year (World Bank 2008).
A high worker turnover may affect firms’ incentives to invest in training their workforce,
and justifies the need to improve the quality of training within the general education
system.
3.2.2 Skill gaps
Formal and informal vocational training programmes do not always address the needs
of the labour market. Cambodia’s workforce must have skills that are aligned with its
transforming economy and that can support the country’s continued economic growth.
Fifty-four percent of employers surveyed claim that there is a mismatch between the
skills offered by vocational training institutions and the requirements of their firms
(World Bank 2010c).
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Figure 3.1 Methods of training needed in Cambodia to upgrade workers
Source: World Bank 2010c, p. 64.
Figure 3.2 Skills mismatch between employers demands and training, according to employers
(2009)
Source: World Bank 2010c, p. 96.
3.3 Overview of the workforce in Cambodia
During the past decade, Cambodia has sustained economic growth by moving from
agriculture to the industrial sector. However, the shift did not take into account the soft
skills required for a different working sector. This requires both general and technical
education, concentrated at all levels, but especially in keeping children in school and
enhancing employability and productivity of the majority of the labour force through
increased skill levels.
3.3.1 Economic growth of the country and the requirements of the workforce
Cambodia, which was characterised by strong economic growth over the past 10 years,
has seen increasing pressure to create jobs and keep up the rapid economic expansion
of the country.
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As one can see from figure 3.3, the country, which until 10 years ago was predominantly
a self-employed, peasant, agriculture-oriented economy, started diversifying its
economy and jobs outside agriculture only recently. New challenges increasingly focus
on how Cambodia can engage more effectively in international trade and use the trade
framework as an opportunity to diversity its economy. All these factors combined
created the necessary conditions which have helped to increase production in a variety
of sectors in Cambodia. Expansion is clearly visible in services – tourism, garments, and
a boom in properties – and as a result of expanded FDI, more factories have appeared,
expanding the construction sector, but creating conditions for growing inequalities
across the society – largely a result of the unskilled characteristics of the workforce.
Figure 3.3 Employment generation6 across sectors, 2001-2008
“Cambodia’s
human
capital problem
is focused on
the work-related
skills of the
workforce,
which often do
not respond to
the specific
needs of
employers...“
Source: World Bank 2010c, p. 35.
3.3.2 What is the current mismatch between the skills available
and the skills required for the country?
Cambodia’s human capital problem is focused on the work-related skills of the
workforce, which often do not respond to the specific needs of employers, particularly
in the new sectors. With the high level of unskilled youth in the workforce, and their
lack of soft skills, according to a survey of employers (CAMFEBA 2008), most employers
reported having difficulties with out-of-school youth as a result of poor workplace
attitudes.
Production technologies and IT remain adapted to a poorly skilled workforce, and
production technologies remain adapted to a labour market where only 7 percent
of participants have completed secondary school. This is happening in parallel to a
diversification of the economy and expansion in garments, manufacturing, services,
construction and tourism.
Three of the highest growth sectors in Cambodia (garments, hospitality and
construction) also report significant skill gaps among new graduates. In these three
sectors, only 20 percent affirm that vocational training graduates are equipped with
the necessary skills to perform their jobs. Yet important variations by sector show
how severe the skills gap is. The garment and construction sectors require low skilled
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and unskilled workers, which makes it easier for rural people to move into them, and
demand less from workers who have dropped out of the education system.
Figure 3.4 Skills employers find lacking in most employees in Cambodia
Source: World Bank 2010c, p. 54.
3.3.2.1 Human capital deficits in the garment sector
Cambodia is highly reliant on this sector as it accounts for approximately 16 percent of
GDP. The sector has experienced incredible growth rates: 28 percent growth per year
and garment exports increasing from almost zero in 1994 to US$2.8 billion in 2007
(World Bank 2009b), accounting for 75 percent of exports in 2002 and 65 percent in
2008.
The boom in the garment sector also led to an expansion in employment, with 30,000
jobs created in 2005-2006 and total employment of 350,000 by 2008. In this sector
80-85 percent of all workers are women, predominantly migrants from the outer
provinces – and most of the time they are the only income earners. On average these
workers have 2-3 years experience within the sector with the majority only having
completed primary education. They face a working week of between 48 to 60 hours,
and the average monthly income is between US$70 and 100.
The high dependence on this sector is discernible from the fact that it alone accounted
for 50 percent of all industrial output and 69 percent of all manufacturing within the
country in 2005. This dangerous reliance makes the country vulnerable to competition
from other countries and international shocks. Lack of competitiveness is exacerbated
by sector-relevant difficulties such as lower productivity, and the unreliable supply and
high cost of electricity. For example, Viet Nam could easily overtake the country, given
that it has lower electricity cost and its total manufacturing cost is about 20 percent
lower than that of Cambodia.
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The impact of the international economic crisis in Cambodia was quite severe with
exports falling more than 50 percent from about US$250 million to 100 million in
January 2009. Furthermore, most of the garment factories in Cambodia are foreign
owned and with the financial crisis affecting foreign markets, FDI in the sector decreased
by 15 percent. This resulted in workers being asked to work fewer hours, with a loss of
US$4-5 million in wages per month. Between 2008 and 2009, 18 percent of the total
workforce in this sector was laid off or suspended as a result of the economic crisis.
“...increasing
productivity
means
promoting skills
and training.”
In terms of the skills gaps of workers in the garment industry, firms do not appear
to consider gaps as excessively severe given that it remains relatively easy to train a
worker to use a specific machine. Yet the sector faces slight shortages of university
graduates, and there is an ongoing strong demand for qualified salesman. Also, lack
of language proficiency of professional workers, in particular English and Chinese,
remains a big barrier to upgrading the sector, with language skills becoming crucial to
manage connections with workers, buyers, clients and company owners.
Furthermore, creativity is also an important skill in the garment sector, but surveys
show that this is the skill that seems to be most lacking. Creativity is the most difficult
skill to find in most employees and across all skill levels, but it is particularly marked
among unskilled workers (67 percent), although there seems to be a big gap also
among semi-skilled (53 percent) and skilled workers (40 percent).
Major constraints lie in poor decision-making skills, among both semi-skilled and
skilled workers. For skilled positions, 93 percent of employers demand a university
degree, whereas 7 percent of employers find vocational training sufficient. Unskilled
workers in the garment sector have very poor technical skills. There were complaints
from one-quarter of employers about the lack of technical skills among unskilled
workers, in particular sewing, applying buttons and mechanical abilities. One-fifth
claimed that poor soft skills are a constraint among unskilled workers, including: team
spirit, motivation, problem solving ability and commitment to a job.
Cambodian short to long-term competitiveness within the global garment sector
therefore still remains a big issue for the country, an issue already highlighted in US
Agency for International Development (USAID) reports (USAID 2005, USAID 2009)
indicating that the market is dominated by a high number of expatriates in upper
management and senior positions. While they comprised only 2 percent of the garment
sector workforce, they made up 10 percent of the wage bill. Training opportunities for
Cambodian nationals as managerial candidates have been put forth, complemented
by the various vocational and technical training programmes, so that employees might
be able to see opportunities and incentives to excel while contributing to value added
activities that increase overall firm revenues and productivity. According to a World
Bank Report (2010), increasing productivity means promoting skills and training. The
top performing garment exports are supplying more, but at lower prices, which could
not be sustainable as garment exports might not be able to compete in wages, and
therefore there is a need to further promote skills and upgrade the human capital in
this field.
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Figure 3.5 Major gaps in skills in the garment sector in Cambodia
Source: World Bank 2010c, p. 59.
3.3.2.2 Human capital deficits in the hospitality and tourism sector
The tourism and hospitality industry in the past decade has grown to become one of
the main pillars of economic growth in the country with levels of tourism reaching their
height of approximately 2.16 million people travelling into Cambodia in 2009. This is
extraordinary growth compared to the mere 20,000 tourists in 1992 (MoT 2010). Growth
in the tourist industry has been the result of the attainment of peace and stability since
the late 1990s, tourist attractions like Angkor Wat becoming a world heritage site in
1992, an increase in international and domestic travel, and the governments’ policies
on tourism development (i.e. open sky policy, visa on arrival, etc.).
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Box 3.1
Foreign direct investment and the volatility associated with it*
There are a number of reasons why volatility of FDI inflows may be negatively associated with
economic growth.
1. The first possibility is that volatility in FDI has a negative effect on growth. If FDI inflows are
uncertain then costs of (and returns to) investment are uncertain because FDI can provide a
stimulus to domestic investment and innovation. It may therefore be the case that volatility
in FDI flows undermines inward investment, with the consequence of an adverse effect on
domestic economic growth.
2. A second possibility might be that the volatility of FDI flows gives a proxy for economic or
political uncertainty. Where FDI is volatile there may be underlying instability (political and
economic) in a country. There is evidence that growth is lower in those countries that face
greater economic uncertainty like Cambodia, and some developing countries tend to be particularly vulnerable to financial shocks.
In the case of garments, and other such products for export, FDI can provide a channel out of rural
areas and out of the informal economy for workers. FDI inflows therefore have a positive effect on
growth, whereas volatility of FDI has a negative impact on a country’s economy and there is no
evidence to show that the effectiveness of FDI to contribute to growth is determined by the level
of human capital in the host country.
It is therefore not the volatility of FDI per se that retards growth, but that such volatility captures
the growth-retarding effects of unobserved variables. One possibility is that economies with high
levels of economic uncertainty will tend to have lower and/or more variable growth rates, and
may also appear less attractive to foreign investors. This is consistent with the evidence for a weak
negative correlation between FDI and its volatility. One interpretation of these findings is that
certain types of FDI are less affected by economic instability (or political instability) than are other
types. It is certain components of FDI that are volatile, and it is these components that are responsive to (and may therefore proxy for) economic uncertainty. This is an area which will need to be
analysed in future work.
* Lensink and Morrissey 2001
The number of hotels and guesthouses has, as a consequence, increased dramatically.
This rapid expansion of hotel services has been accompanied by an increase in
the number of people working in the hospitality sector – requiring an increase in
manpower in the service industry. Hotels have grown together with travel agents
and tour operators, trained licensed tour guides, airports, infrastructure, and roads.
However, despite the high growth rate where hotels and restaurants have grown at
an average annual rate of 15 percent, the sector is highly vulnerable to international
shocks, as seen from the decline during the Asian financial crisis (1997-1998), the SARS
epidemic (2003) and the global financial crisis (2008-2009). Tourism has experienced
cutbacks with the number of tourist declining by 2.3 percent from 2007 to 2008.
According to the Ministry of Tourism, during the economic crisis, tourism in Cambodia
showed a 10.7 percent decrease compared to the first quarter of 2009. The second
quarter however was marked again with an increase of 4.66 percent when compared
with the same period the previous year.
During the economic crisis, there were more regional tourists from mid- to low-income
countries (Viet Nam and China) in 2009. With the decline of hotel occupancy rates,
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many luxury hotels closed temporarily during this period, and hotel staff were either
found to be taking temporary leave or to be laid-off.
Table 3.1 Total number of people directly employed in the tourism sector
Sectors
Accommodation
Number of direct jobs
%
11,117
29
Food and beverage
8,287
15
Shopping
4,212
8
Transportation
10,417
19
Guides
2,235
4
Airport staff
5,274
10
Travel agencies
2,660
5
Tourism related civil servants
4,763
9
Other
1,000
2
Total
54,965
100
Source: Naron 2009, p. 288.
The tourism sector accounts for than 13 percent of GDP, with about 4 percent from
hotels and restaurant services. Yet tourist activity has been concentrated in and around
the temples and therefore has not contributed largely to the wider economy. Most of
the tourists are concentrated in the areas of Siem Reap, Sihanoukville and Koh Kong,
where most of the hotels are located.
Normally the set of skills required for employees in this sector are very broad in scope.
The skills vary based on the position, but generally the basic skills and aptitudes needed
include pleasant personality, communication skills, computer skills, good attitude,
patience, outgoing personality, general knowledge with adequate information and
knowledge of the job to meet the customers’ expectations, organisational skills and
the ability to organise things on time and meet travel schedules.
Language in the hospitality sector, which is a crucial skill, faces an important gap,
where only 12 percent (NIS 2007) of employers claim that graduates have the necessary
language and technical competencies to perform the job. In this sector there naturally
is a strong demand for foreign languages, even for unskilled workers, to serve tourists,
offer quality customer service and remain competitive in an increasingly active sector. To
complement this deficiency, finding people with strong decision-making and problem
solving skills remains difficult despite the fact that these skills are strongly needed for
managerial positions at all levels in this sector. Employers also complain about the
lack of soft skills at all levels. For the technical skills, it seems difficult to find workers
with housekeeping skills. Lack of team spirit and self motivation are also mentioned
as constraints. Interestingly, in the hospitality sector, formal education requirements
do not appear to be as strong as in other sectors: for professional and managerial
positions (skilled workers) only 44 percent of employers required a university degree,
with 39 percent of employers found a vocational training curriculum sufficient and 17
percent wanted at least a high school education.
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Figure 3.6 Major gaps in skills in the hospitality sector in Cambodia
“..broadening
job skills,
no matter
at what level
an individual is
working,
can improve
career options.”
Source: World Bank 2010c, p. 58.
The need for languages skills for all unskilled, semi-skilled and skilled workers might
not seem fully relevant, especially for the unskilled and semi-skilled categories. Yet
broadening job skills, no matter at what level an individual is working, can improve
career options. Learning a foreign language, for instance, improves an individual’s
overall job skills, and makes the unskilled worker more valuable as an employee. It
also broadens future career options and can become a critical indicator for a potential
career option and for the possibility to decide on different career paths.
There is a broad-based lack of competencies throughout the various skilled segments
of society. This is compounded by the fact that filling jobs seems to be difficult in the
hospitality sector, particularly for positions such as chefs, receptionists, and food and
beverage managers and bar managers. Training also seems to be a difficult challenge,
which needs to be tackled given that tourism continues to play a vital role to support
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Cambodia’s economic growth and poverty reduction efforts. High turnover of staff is
also a characteristic of this sector.
3.3.2.3 Human capital deficits in the construction sector
The construction sector has been one of the most important for Cambodia’s economic
growth. In 2009 construction accounted for 7 percent of GDP, and most of the focus for
the last 15 years has been on reconstruction of infrastructure, which has contributed
to the expansion of construction activities. The annual growth rate was on average 13
percent between 1994-2007, with a construction boom between 2002 and 2006, where
the annual growth rate was close to 20 percent. The boom was driven particularly by
infrastructure projects and residential construction in the capital.
The global economic crisis affected the construction sector in Cambodia in mid-2008,
with about 5 percent of jobs in the sector affected. The financial crisis also decreased
demand for real estate as there was a greater supply of property, which resulted in
a decrease in property prices. About 30 percent of construction projects have been
either cancelled or scaled back. In the first 11 months of 2008, Cambodia had a total
of 1,869 construction projects, down from 1,942 in 2007. According to the Ministry of
Land Management, Urban Planning and Construction, most of the affected projects
were funded by FDI, and as the world faced difficulties in 2010, the decline in the real
estate market kept the sector stagnant.
Human capital gaps in this sector are widely visible, with only 20 percent of employers
considering that graduates are fully equipped with the required skills. There is also an
apparent shortage of architects and engineers. According to the employers’ survey, 53
percent of employers claim that engineer positions are the most difficult to fill, followed
by architects at 47 percent. Often firms are forced to import foreign architects and
engineers for important projects and positions. Differences lie in the technologies and
tasks that workers are expected to perform. Yet, when employers stress the importance
of soft skills, as opposed to technical skills, one of the main constraints comes from
the technology mismatch. A lack of both hard and soft skills appear to be a general
feature of the Cambodian labour market, affecting the few skilled and the majority of
unskilled workers.
Filling jobs seems to be difficult in the construction sector, particularly hiring semiskilled or unskilled carpenters, plumbers, metal and iron workers, and electricians. Most
of the skills required for low-skill construction workers include learning and reading
basic symbols with specific and correct meaning, numeracy and understanding basic
measures, relevant social and communication skills, and behaviour in different aspects
of conflict management. All these skills are a mix of soft and hard skills, which most
employers are trying to address within their own firms.
3.3.2.4 Human capital deficits in the agricultural sector
According to the Strategy Framework 20157 it is perceived that demand for Cambodian
agricultural products will remain strong in the international market. Based on current
economic trends the growth of food, beverages and tobacco is expected to be strong
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with about 14 percent growth, despite the fact that agribusiness investments are
limited. This perspective provides a good basis for industrial development, where more
resources and new mechanisms are needed to build domestic productive capacity and
competitiveness. Efforts should therefore concentrate on diversifying the industrial
base and on modernising the sector. However the high cost of mechanisation has
discouraged the introduction of modern farming practices.
“Historically
agriculture
has been...
one of the most
important
sectors
for Cambodia.”
Historically agriculture has been (and still is) one of the most important sectors for
Cambodia. Accounting for 29 percent of GDP in 2007 – down from 43.7 percent of GDP
in 1998 (Naron 2009). Given the rural nature of the country, agriculture supports nearly
59 percent of the population (World Bank 2009b). Subsistence farming accounts for 90
percent and business farming 10 percent of the sector, with subsistence farming often
employing unpaid family help, and business farming employing seasonal migrant
workers.
Lack of modernisation in the agricultural sector is widespread. The country can produce
crops at a low unit cost, but only thanks to very cheap labour and spending little on
inputs. The supply chains that link farmers to inputs such as fertilisers and markets are
weakly developed, resulting in sector development being only a fraction of its capacity
because of lack of working capital (UNDP 2009).
In terms of human capital in the agriculture sector, one of the strengths for upgrading
the industry is the abundant and low cost labour available in rural areas, combined
with diverse agricultural ecosystems offering several types of soil (although soil fertility
is poor in many locations). However, modern farming implies a number of challenges
through technology transfers, and access to technology, and expertise by farmers and
extension officers. Still, upgrading the sector will increase the value-added of primary
agricultural production, enabling farmers to get out of subsistence agriculture and
encouraging their involvement in agricultural marketing – a field they are not fully
involved in.
3.3.2.5 Human capital deficits in the mining sector8
At its current stage, Cambodia’s mining sector is composed of industrial minerals
operations generally serving the domestic market, along with base and precious metals
operations largely at the exploration stage. Artisanal and small scale gold mining also
occur in Cambodia. Exploration of minerals currently comprises about 0.4 percent of
GDP.
Cambodia’s mineral resources remain largely unexplored, but several important
minerals have been discovered, including bauxite, copper, gold, iron ore, coal,
gemstones and ilmenite. Minerals currently extracted include gemstones and gold
(mostly mined by small-scale operators) marble, granite, sand, limestone and salt.
Mineral production in Cambodia has increased over recent years, and so too have the
number of mineral exploration licences granted to both foreign and local companies.
While exploration appears to have slowed during the financial crisis, steady recent
increases in commodity prices (for example, the price of gold is currently at historical
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highs), have triggered renewed interest in mineral exploration and development in
the country.
In order to successfully develop the mining and petroleum sectors, Cambodia needs to
upgrade its capacity to manage the sectors effectively. This implies supporting capacity
development in the public sector, to increase the skill levels required to manage and
contract petroleum and other minerals exploitation. Capacity development should
therefore focus on individual and technical capacity of people and institutions. UNDP
and the Ministry of Industry, Mines and Energy (MIME) signed a Memorandum of
Understanding in January 2011 which will focus on policy, regulatory and capacity
strengthening of Cambodia’s mining regulatory department. UNDP is also working
with the Asian Development Bank (ADB) and other development partners to improve
the skills and capacities of staff at the Cambodian National Petroleum Authority.
Particularly for the petroleum industry, Cambodia has expressed interest in developing
a local industry. Yet the country recognises that the petroleum industry is capital
intensive and employs little labour. In fact, apart from the initial workforce needed for
the construction of plants, the labour required in the industry is generally specialised
and highly skilled. This often results in high level positions being filled by expatriates
brought into the country by companies involved in the extractive industries (World
Bank 2009e) and represents another area in which greater education levels would
provide large returns for Cambodia’s economy.
Shortages of manpower and the lack of specialised skills in the mining and petroleum
authorities are among the key challenges. Cambodian educational institutions that
were training geological and mining technicians and engineers ceased operations in
the 1990s. The result is that human resources in areas such as geology are brought in
from other countries at high cost. In response to this important need, UNDP is partnering
with the Institute of Technology of Cambodia to reopen Cambodia’s geosciences
and engineering school. The new Department of Geo-Resources and Geotechnical
Engineering could open by late 2011 and graduate its first students by 2015.
3.3.2.6 Human capital deficits in the ICT sector
The information and communications technology (ICT) sector in Cambodia has
expanded rapidly, and it is estimated to be generating over US$429 million per year.
However, challenges for growth in this sector include the high price of Internet and the
small pool of qualified people in this sector, which hamper the country’s international
competitiveness. This is visible especially when compared to countries like India that
have strongly invested in ICT, currently contributing the majority of the country’s
economic growth through exports.
The civil war disrupted much of the ICT infrastructure within Cambodia. For example,
Cambodia has the lowest rates of fixed landlines among ASEAN countries.
It is not easy to properly assess the impact of ICT in Cambodia given the scarcity of data
in this area. The general trend, however, shows that the vast majority of households in
developing countries like Cambodia have limited access to ICT, including computers
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and the Internet. Traditional indicators, such as fixed telephone lines and mobile
subscribers, are not sufficient to determine the extent of the digital divide, but are
still able to highlight the need to measure community or public access to ICT beyond
traditional methods. Suggestions include the use of a wider range of indicators to
measure community access, including tracking the percentage of communities, in
villages and towns, connected to the public telephone network (fixed and/or mobile),
and those with a public Internet access centre, even starting from the most basic access
means.
Figure 3.7 ICT in Cambodia compared to other ASEAN countries (fixed telephone landlines)
“The RGC,
through the
NSDP, shows
the country’s
commitment
to keep
exploring
new economic
frontiers...”
Source: ITU 2008
Lack of competitiveness in the ICT sector is caused by a number of hindering factors,
including the high cost of Internet broadband (second highest among ASEAN Countries
with a price of up to US$400 per MB bandwidth) and a low number of qualified ICT
workers in Cambodia. According to UNDP (UNDP 2009), employers face a small pool
of labour and high turnover. Yet workers with only 2 or 3 years experience get a low
wage, up to US$600 per month, which shows the high demand for skilled workers in
this field, as wages for similarly skilled workers in Viet Nam and Cambodia are much
lower when compared to Cambodia. It is argued that the government should consider
creating a standard accreditation scheme for ICT education and training, and including
ICT curriculum in primary and secondary schools to upgrade skills and increase the
pool of professionals able to make use of ICT effectively.
The RGC, through the NSDP, shows the country’s commitment to keep exploring
new economic frontiers while nurturing existing and emerging sectors such as ICT,
including telephones, telecommunications and mass media. Especially with increasing
competition and largely led by private operators, Cambodia has moved considerably
ahead in the use of mobile phone devices. The use of computer technology has spread
equally fast along with increased expertise among young people.
The Government states in the NSDP its intention to continue to enhance the efficient
use of information technologies, implementing improved personnel management and
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“Certification,
accreditation
and financial
support are
suggested to
improve the
relevance and
quality of
informal
training
programmes.“
capacity building for government officials. It aims to create an enabling environment
to attract private investors, both domestic and foreign, to ensure the transfer of
know-how and technology to all sectors of society – from agriculture to industry and
services.
3.4
Current interventions to fill the knowledge and skill gaps
among workers in Cambodia
In a context of high numbers of youth entering the job market with a low level of
hard and soft skills, what are the policy options that best suit countries that have a
development landscape like Cambodia?
The main bottlenecks in skill development in Cambodia that need to be addressed
include: drop-out rates, poor quality education, and the need for training for outof-school youth who have little chance to reintegrate themselves into the formal
education system. Particularly the last intervention could have large impacts on the
current workforce of Cambodia. Certification, accreditation and financial support are
suggested to improve the relevance and quality of informal training programmes.
Three short-term policy recommendations are outlined in Chapter 6 for Cambodia in
order to fill in the knowledge and employment gaps.
3.4.1 Industrial diversification and skill gaps in Cambodia
The current composition of the Cambodian economy shows that sectors significantly
contributing to GDP have changed quite dramatically between 1995 and 2009,
reflecting a shift from agriculture to industry. Employment distribution reflects these
changes. Industry (mostly garments), services (mainly tourism) and agriculture (mainly
paddy rice) are the leading sectors of the Cambodian economy, and have been central
to rapid GDP growth in the past. However, growth in these sectors alone cannot
support an adequate level of employment and revenue generation to sustain national
development. In the context of industrial development, the thinking should go beyond
the traditional cheap labour and low end sectors.
Diversification of the economy therefore requires upgrading low-skill workers,
exploring opportunities for expansion along value chains, and identifying and enabling
new emerging industries. The emergence of the extractive industries and agricultural
sectors highlights the opportunities for Cambodia. A strategic vision for Cambodia’s
economic development has also been stressed in the government’s diversification
strategy. There certainly are challenges in achieving this vision, but taking advantage of
the global and regional economy would enable Cambodia to create a market economy
which would be able to reduce poverty and improve living standards.
However, in addressing the skills gap it is important to create and improve coordination
mechanisms between prospective employers and education and training providers,
increasing the quantity of public training provision and encouraging workplace
learning. There should be a focus on improving access to quality skill development
outside high growth urban areas, implanting systems for the recognition of prior
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learning, and targeting entrepreneurship training so that it encourages and enables
the formalisation of small enterprises.
3.4.2 Targeted interventions
Enhancing skills needs a two-pronged approach to address the immediate needs of
the private sector. A key constraint that firms face relates to basic training, including
overall attitudes towards work. Thus basic training needs to be reinforced and
expanded on a country-wide scale. Firms also face difficulties acquiring people with
specialised skills. Thus focus should also be placed on increasing the effectiveness
of delivery mechanisms, while increasing access to training centres, partnering with
business associations and universities, and creating training institutes managed by a
coalition of private sector firms.
“...focus should
also be placed on
increasing the
effectiveness of
delivery
mechanisms,
while increasing
access to training
centres...“
Cambodia’s economy is dominated by a large informal sector, often considered hard
to upgrade into industry. Small- and medium-sized enterprises (SMEs) comprise the
main source of the production base for the country, but these sections of the economy
are in much need of upgraded technology and assistance preparing for regional and
global competition. Cash transfers and the availability of credit through commercial
banks could create opportunities for these SMEs to open up and grow faster in areas
such as food, beverage, tobacco, construction materials, etc.
The lack of social protection is a critical aspect of the informal economy so creating
systems to increase social protection coverage for workers, both male and female, in
formal and informal sectors is also important.
There are a set of opportunities that have been outlined in the government’s industrial
diversification strategy for potential sector growth in Cambodia, including: agriculture
forward linkages (land, labour); garments and footwear and accessory linkages (trade
opportunity, labour); and tourist attractions. For the development of these industries,
Cambodia needs to focus on sector-based competitive advantages, and understand
and capture more value-added in the existing industries. By doing so, it could compete
well in the international market. However, developing the skills of its workers will
remain a precondition for success in development.
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IV.
HUMAN CAPITAL IN GOVERNMENT
AND THE NON-BUSINESS SECTORS IN CAMBODIA
4.1 Introduction
Existing discussions of human capital, competitiveness and economic growth in
Cambodia focus almost exclusively on the skill gaps and associated training and
education requirements of workers in the private sector. This is understandable given
the severity of the economic downturn and the need to generate new employment
through a robust economic recovery. Nevertheless, it tends to push into the
background major human capital problems in the country as a whole (those relating to
government and non-business agencies such as professional associations, civil society
organisations and independent regulatory bodies). Yet, reducing the human capital
deficit in Cambodia in order to place economic recovery on a sustainable and robust
path is a task which requires a comprehensive approach to human capital development
which spans private business, government and civil society organisations.
“...identifying skill
gaps and areas
of mismatch between the
supply and
demand for skilled
labour must go
hand in hand with
an appropriate set
of policy
recommendations...“
This may seem a tall order in a country in the midst of a growth slow-down. However,
as argued in Chapter 1, diversification of the Cambodian economy such that it is able
to tap into the global knowledge products and technologies of the future requires
going beyond the immediate skill gaps in the private sector to examining the human
capital requirements and performance within government and relevant civil society
organisations. Thus, identifying skill gaps and areas of mismatch between the supply
and demand for skilled labour must go hand in hand with an appropriate set of policy
recommendations on educational reform and training curricula, better coordination
across different government agencies, and secure funding for education and vocational
training activities. Accomplishing this will mean examining and analysing the ability of
government to create and sustain these initiatives. And it raises the question of whether
the factors which create skill deficits in private business (underlying educational
quality, inadequate wages, poor incentives to upgrade existing skills) are present in
public agencies.
Another concern is based on political and administrative expediency: civil service
reform is an expensive and painstaking process requiring considerable political will
(Table 4.1). This will be harder to achieve when the economy is in recession than in
periods of high growth and revenue. Hence, in lean economic times it makes sense to
focus on economic recovery while attending to governance issues during less stressful
times.
In fact, there are several good reasons why a Human Capital Development Roadmap to
promote competitiveness and economic growth needs to include the human capital
requirements of key areas outside private business, and should engage reform and
increased capability in the public sector which is making the policy decisions. This
chapter will examine some of these considerations.
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Table 4.1 Historical size of the civil service by source a/b/
Year
Budget law
CAR
1994
148,353
N/A
1995
143,855
N/A
1996
147,086
N/A
1997
153,372
N/A
1998
156,731
161,466
1999
155,233
162,772
2000
165,539
162,991
2001
164,397
162,969
2002
164,219
165,369
2003
167,778
166,381
2004
N/A
165,953
2005
N/A
164,595
2006
N/A
163,469
Note: The Council for Administrative Reform’s:
a/ 2004-2006 figures based on CAR projections.
b/ Budget law data includes political appointees and contract and floating staff, while CAR data do not.
Source: Taliercio, R.R. Undated.
4.2 Competitiveness, economic growth and the state of development
Current literature and development experience suggests several arguments for
inclusion of human capital deficits and requirements of the state in deriving an overall
Human Capital Development Roadmap needed to foster future sustainable economic
growth. Perhaps the single most important reason is the size and complexity of modern
democratic, developmental states. Despite many attempts to roll back the state during
the ideologically polarised days of the 1980s, few if any democratic states have been
able to significantly reduce public expenditure to GDP ratios, a common measure of
the size of the state (Table 4.2).
The size of the state has been much lower in many Asian economies, partially because
of lower revenue to GDP ratios, but also because they have often underspent on critical
health, education, R&D, infrastructure and other public goods. It has also been lower
due to the fact that democratic governance has been a recent arrival in many countries
of the region. The overall effect of the advent of democracy and the media freedom
that goes with it is to raise the demand for public services for the majority. Democratic
states are not small states and overall one would expect the size of the state to increase
over time as these social welfare and infrastructure demands are institutionalised.
The increasing complexity of the state is another phenomenon of modern
governments. The traditional roles of keeping order and providing a legal framework
for the enforcement of property rights and settlement of disputes has given way
to a bewildering variety of tasks such as, among many others, providing physical
infrastructure, ensuring availability and access to key public services in health
and education, managing a stable macro-economy, managing and protecting the
environment, and helping populations develop, while taking part in international
negotiations and interactions. This is a very large set of responsibilities for a nascent
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state, especially one in which its democratic governance is under constant public
scrutiny.
Table 4.2 Public spending as percentage of GDP and Human Development Index
Country
Year of highest level
2002
HDI
Norway
52.0 (1992)
42.3
0.942
Sweden
67.5 (1993)
52.6
0.941
Canada
49.9 (1992)
38.2
0.940
Belgium
57.1 (1985)
46.2
0.939
Australia
37.7 (1985)
32.5
0.939
United States
34.8 (1992)
30.9
0.939
Iceland
40.5 (1992)
40.3
0.936
Netherlands
53.3 (1987)
41.8
0.935
Japan
—
37.9
0.933
Finland
59.1 (1993)
45.2
0.930
France
51.8 (1993)
49.0
0.928
United Kingdom
43.2 (1993)
39.1
0.928
Denmark
58.0 (1996)
50.1
0.926
Austria
53.3 (1993)
48.8
0.926
Luxembourg
44.0 (1992)
40.5
0.925
Germany
47.3 (1996)
46.3
0.925
Ireland
50.7 (1985)
31.8
0.925
New Zealand
51.8 (1986)
39.0
0.917
Italy
55.4 (1993)
45.5
0.913
Spain
47.2 (1993)
38.8
0.913
Source: Tanzi 2004
The proliferation of modern government does not stop here either. Promoting quality
assurance and surveillance requires the participation of user groups and related
associations. Regulatory agencies are needed to provide independent oversight and
control over commercial operations; professional associations provide minimum
service standards; citizen’s self-help bodies are an important source of local information
and self-help in natural disasters; media outlets provide mechanisms to explain policy
choices to the general public and prepare it for a shift in policy. Modern democratic
government is a study in persuasion and in non-violent dispute management.
It is no surprise then that the last two decades, during the advance of globalisation,
international trade and capital integration, governments in advanced as well as in
many developing countries have been occupied with modernising. Some important
aspects of these efforts have included streamlining intra-government coordination
and financing mechanisms, establishing working groups and strategy units, and
creating public consultative mechanisms such as government position papers which
invite public participation and expert overview. All the developments in modern
government and, by extension, patterns of governance, show that the state is not just
a clearing house for legal disputes or the policeman of last resort. It has also become
an agent of change and a means of anticipating and mitigating the effects of future
emergencies and crises.
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Hence, any human capital development strategy which leaves out the largest and
most influential player in the system is unnecessarily limiting and partial. Moreover, it
is unlikely to promote international competitiveness or lasting growth for the simple
reason that all the indicators needed for generating these results require significant
action from the state itself.
These activities require human capital development within the state no less than in
private business. E-governance, results-based management, public consultation,
public opinion response and management, adaptable and flexible working groups and
taskforces, independent reviews and performance management audits have all become
the armoury of modern government. The Human Capital Development Roadmap is at
best incomplete and at worst unhelpful in solving urgent policy problems if capacity,
technological and coordination human capital deficits are left out of the equation.
It is for these reasons that the importance of institutions and governance is being
increasingly emphasised in recent development literature. The Rectangular Strategy
is quite right when it places governance centre stage in promoting equitable
and sustainable growth. The issue goes much further than skill mismatches in
private business. It goes to the heart of the wider issue of by whom and how policy
recommendations in particular sectors might be solved, how and over what period
they may be financed and the overall international and domestic policy context in
which they will have to function.
4.3 The state and the creation of a knowledge economy
An important conclusion of the international experience in laying the foundations
of a knowledge economy is that while tertiary education and vocational training are
essential components of the overall design, they by themselves are necessary but not
sufficient conditions for a successful transition to a knowledge economy. Information
infrastructure, innovation networks and the institutional framework for effective
governance (e.g. protection of intellectual property rights) is just as critical.
As the tables below show (Table 4.3, Table 4.4), despite a decade of record economic
growth, Cambodia is still behind the average level of information infrastructure, R&D
and product emulation capability, and in the human development related coverage
of public services in education and health. This is not to say that the Cambodian
performance on many of these indicators (especially the Human Development Index)
has been unimpressive (cf. UNDP Human Development Reports); it clearly has not. But
because of the low base and the human capital erosion under the twin pressures of
political conflict and prolonged economic stagnation during the period before the late
1990s, there are still major human capital and development deficits to be filled.
An industrial diversification strategy, based either on technological classifications such
as information or biotechnology, or along sector definitions such as electronics or
mining, or along skill categories such as financial services or the hospitality industry, will
also place additional demands on current government capacity to organise, coordinate
and finance the human capital investments associated with such diversification. It will
require considerable new capacity to forecast industry trends, the impact of regional
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economic integration and the most effective mechanisms of promoting private
investment in public projects, as well as a whole host of skills in pricing, negotiating,
risk management and project planning over a long period.
Table 4.3 Expenditure on R&D in selected countries, 2000 and 2007
000 PPP$
Country
As percentage (%)
of GDP
2000
2007
19,659
6,838
Canada
Finland
France
Burkina Faso
Cambodia
Georgia
Germany
Greece
Per capita (PPPS)
GERD performed
by higher education
sector (%)
2000
2007
2000
2007
2000
2007
18,392
0.19%
0.11%
1.6
—
0.05%
—
0.5
1.2
—
—
—
11.8%
—
16,687,599
23,970,003
1.91%
2.03%
4,439,726
6,320,699
3.34%
3.47%
543.8
729.1
28.1%
36.0%
857.8
1,197.8
17.8%
18.7%
32,920,326
43,359,554
2.15%
2.10%
556.2
703.3
18.8%
19.2%
21,111
27,805
0.22%
0.18%
4.5
6.2
28.6%
26.8%
52,283,497
69,334,450
2.45%
2.54%
635.2
839.4
16.1%
16.3%
1,269,719
1,845,571
0.51%
0.50%
115.3
165.6
44.9%
50.4%
“...the overall
human capital
needs of an
industrial
diversification
strategy
require...
an assessment
of the
complementary
skills in
Source: Altbach, P.G. et al. 2009.
Hence, the overall human capital needs of an industrial diversification strategy require
not only identification of the skills needed at the industry level or in a given geographical
region. It also needs an assessment of the complementary skills in government to plan,
finance, execute and evaluate such policy shifts. This is not only a matter of identifying
skill shortages and training requirements at the individual government civil service
level or even at the level of a particular institution or agency. Technological and
process-related gaps in E-governance, budgeting processes, evaluation techniques
and negotiation procedures are just as important. This is in addition to specific line
ministry capacity gaps in a given sector: providing more teachers to improve secondary
school enrolment rates and minimum standards, coordinating more closely with
agencies involved in vocational and on-the-job training (e.g. the Ministry of Labour
and Vocational Training in the Cambodian context), and the design of new curricula
based on stakeholder participation and industry surveys.
The subject of state deficits in human capital in the context of industrial diversification
and building foundations for a future knowledge economy are important enough to
merit separate and detailed treatment. The aim here is to underscore the importance
of the question and to emphasise the dangers of using a partial, short-term vision
approach to human capital needs assessment in Cambodia as it tries to design a
workable strategy for future economic growth.
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Table 4.4 Public educational expenditure on tertiary education
as % of total public education expenditure, 2000 and 2007
Country
2000
2007
Burkina Faso
—
11.1
Cambodia
5.0
3.4
Canada
35.7
—
Finland
34.0
31.7
France
17.6
21.4
—
—
Germany
24.2
25.2
Greece
24.0
36.1
Georgia
Source: Altbach, P.G. et al 2009.
4.4 Current realities and challenges to human capital development
for the Government
Within Cambodia, there are many manifestations of the human capital deficit within
the Government that is affecting the development of human capital in the wider
society. In tackling the human capital development challenges in the country, the
Government will have to simultaneously make changes to their internal structures and
in the systems that are responsible for undertaking the reforms. In order to determine
how the Government should go about addressing its internal human capital needs, it
is important to look at the current situation, and what some of the challenges are.
4.4.1 Institutional challenges and improving coordination
To begin with, there are various challenges presented in terms of the delivery of
educational services, including the supply side constraints (demand side constraints
were discussed in Chapter 2). These include issues such as the coordination problems
of Government ministries involved in the education sector, the quality of education
resources (teachers, access in different regions, and educational supplies) and the
quality of the education itself. All of these factors create a suboptimal education
system delivered to Cambodians, which in turn translates into human capital deficits
in the Government itself.
In examining supply side constraints, one must first look to the source. In Cambodia,
there are significant institutional constraints caused by failures in coordination among
Government ministries, and these are a major concern for the reform of the education
system. For example, there is competition between different ministries that control
different parts of the education system. There are MoEYS, and MoLVT, which compete
for control over the provision of education and training. Additionally, other ministries
share supervision of the various universities in Cambodia. As Figure 4.1 shows, for
the 88 public and private university institutions in the country, there are 11 different
ministries who supervise at least one. For MoEYS itself, there are also some concerns
about its ability to take in, process, and disseminate global funds for the education
system, to formulate appropriate policies and responses to educational reform needs,
and to implement these policies and strategies (Chhingh and Dy 2009).
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Figure 4.1 Universities under supervision of ministries
“The private
sector must
become more
deeply involved
in the
education sector.
if they are
to see the
improvements
in skills and
training
that they seek”
Source: MoEYS 2009.
There also, to some extent, needs to be a change of mindset within the Government.
While the efforts made to improve education, especially basic education, have
been indisputably impressive, there needs to be a more cooperative attitude within
the Government in terms of both reforms of the education system and reforms of
the operating status quo within the ministries. The current competition within the
Government is inhibiting the full realisation of Cambodia’s human capital potential.
Additionally, without this top-down initiative for change, the bottom-up changes
that are necessary, such as teacher training and a reduction in corruption (discussed
below), will never happen.
An essential part of this change in attitude will be a concomitant increase in the
education budget. As will be explained, this is a huge restricting factor on education
reform, and it is unlikely that any plan will be able to be rolled out comprehensively
and appropriately without a substantial enough budget.
The Government also needs to re-evaluate its attitudes and perceptions regarding the
role of the private sector in the provision of education. The private sector must become
more deeply involved in the education sector if they are to see the improvements in skills
and training that they seek. However, the Government must realise that this will likely
not happen, or will happen in too disparate a manner for it to be effective or measurable,
unless the Government takes a strong hand in organising, initiating, and leading these
efforts. Without a more cooperative and proactive attitude the Government will not
be able to realise the full potential created from private investments in the education
system.
These coordination and attitude problems are also important because they lead to
further problems in the education sector. Without effective leadership and oversight,
there is less regulation of the inputs in the education system, such as teachers. Cambodia
suffers from a severe shortage of teachers, and in 2007, there were 51 primary school
students and 29 secondary school students to every one teacher (World Bank 2010c).
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“...lack of
coordination
has led to
incompatibilities
in standards
and
qualifications in
education.“
Teachers are also often not adequately trained, further inhibiting the learning process.
Lack of regulation also leads to lower quality resources. One example is with regard
to the location of physical school buildings. While Phnom Penh and other urban
centres are well equipped with schoolhouses which can accommodate pupils, other
regional or more rural areas may be far removed from the nearest school building. If
this is the case, families may decide the school is simply too far away to make their
children’s attendance economical. Other resource constraints may include educational
supplies. Limited basic facilities, whether it is the school house or school supplies such
as textbooks and paper and pencils, inhibit the ability for teaching to be effectively
carried out.
These resource and regulation restraints contribute to issues with the quality of
the actual education as well. Often, because of lack of good pay, teachers will
charge students informal fees, which seriously affect the quality of the education
being provided. Students can also pay for their grades, another way for teachers to
supplement their inadequate income. This then leads to a climate of unaccountability
in the schools, making it more difficult to build a school system based on meritocracy
(Tan 2006). There is also a lack of quality control in educational institutions and little
adherence to international standards, meaning that participation in an educational
institution does not guarantee quality education.
There are also serious concerns stemming from the fact that this lack of coordination
has led to incompatibilities in standards and qualifications in education. This is twofold:
first, a lack of a recognised qualification system means that for students that have only
partially completed lower levels of education, or those that have undertaken informal
or work-sponsored education, there is no system for verifying the skills they have
gathered; second, a lack of coordination for standards that do exist mean that for a
typical secondary or tertiary education, the skills that individual students emerge with
may be vastly different from region to region or school to school. This complicates
attempts at further education, as well as making it difficult for employers to be assured
that hiring an employee with a certain education level will provide a certain skill set
(see Chapter 3 for implications of this in various sectors). It is important to note as well
that any such qualification scheme will have to be based on a strong, corruption-free
education system. Having qualifications will be of no use if people can still buy degrees
or certifications as they do now. And there will have to be a higher body to determine
qualifications, such as a committee of accreditation for universities and vocational
training. Of course, without a strong educational system which is capable of adequately
teaching and training students, a qualification system is largely meaningless. Still,
qualification standards are an important element in taking the education system
forward.
These institutional constraints are creating difficulties in carrying a comprehensive
educational system forward. Of course, there are serious impediments to improving
this situation. One of the greatest concerns is the limited budget available, which
has resulted in low pay for civil servants as well as teachers, the inability to finance
improvements to resources, and difficulties in implementing changes to the system.
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The lack of competitive pay has numerous implications. As discussed above, for
teachers the pay does not incentivise individuals to become teachers, to produce
quality education, and can lead to corruption within the school system. For civil
servants, this can lead to similar impediments: skilled individuals will not chose to
enter the civil service as they will not be duly rewarded; those that are members are
not incentivised to work hard and/or improve their skills; corruption will continue to
be a pressing concern.
The lack of an adequate budget means that the Government will face challenges in
financing improvements to existing resources, such as building new skills, providing
educational tools, or providing financial incentives for poor families to send their
children to school. And of course it will also make it difficult to implement and sustain
changes, as adjustments to the system always require substantial capital to get them
up and running and to ensure that they are fully and properly implemented. Given
these resource constraints, the Government must be specific in their efforts to reform
the system. When undertaking the Roadmap, they will have to bear in mind these
constraints so as not to focus solely on one area – all areas are equally important.
4.4.2 Creating a stronger information database
In examining and undertaking reforms to the challenges presented above, a
comprehensive and up-to-date information system will be essential to ensure that the
correct changes are made and that they are implemented in the right way. In the past,
as currently, a key concern has been that there is not adequate information available
to predict and comprehensively address issues and challenges that will arise in the
future, or even that exist now. This lack of information can be seen to some extent in
this report, as there are various gaps in the data collected that exhibit the piecemeal
availability of information. Creating a strong, comprehensive database of information
is a key element in education reform.
The first issue which must be tackled in this area is the collection of information. Major
indicators will have to be decided on by the Government, in cooperation with key
stakeholders within and outside the education system, to determine how to accurately
and effectively measure the evolution of education and training efforts and reforms.
This will involve coordination among various actors, mostly importantly between
the Government and the private sector, in order to identify skill gaps and training
requirements. These indicators will then have to be regularly and systematically
collected in order to create an expansive database from which to draw knowledge and
undertake analysis. This collection will have to occur in all sectors of education, meaning
that greater cooperation and coordination of ministries in charge of universities of
vocational training sectors will have to be ensured. It also means that a greater effort
will have to be made to collect information from the private sector, both on the skills
that are missing and on private sector attitudes towards potential remedies for these
skill gaps. The private sector will also have to be engaged in order to collect market
information, which will be key to tracking changes and growth. Finally, it will also
be important to gather information from the workforce itself, in order to determine
the motivations and opinions of workers, and why they are or are not completing or
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“Cambodia
must focus
in the future
on the
development
of capcity
in both
its major
economic sectors
and the
public sector.”
continuing their education, and finally and most importantly, what needs to be done
to incentivise them to gain a higher level of education and training.
However, collection of this data is, of course, only the first step. The analysis of this data
in order to track changes and make the appropriate changes to the education system
will be a crucial element in developing a versatile and relevant education system. One
of the most notable features of the education system now is that employer attitudes
seem to show that even with higher levels of education, employees are not found to
have the requisite levels of skills necessary (see Chapter 3). Thus, the education system
needs to be tailored to address this deficit. After the necessary education and market
data is collected, the Government will need to properly analyse and assess the data in
order to develop or reform the education system.
There are two challenges in this regard. First of all, as is mentioned elsewhere in
this chapter, the Government will have to have a highly capable workforce in order
to undertake this analysis in an effective manner, which reinforces the idea that the
Government needs to be inwardly as well as externally focused when undertaking
human capital analysis. The second major challenge will be discussions with the
private sector. Without their input, it is likely that any reforms undertaken, even with
a skilled interpretation of the data, will be inadequate. Their views are imperative in
terms of understanding various areas, from skill gaps to the benefits of retraining to
employee attitudes to cooperative training efforts. Additionally, the market data they
can provide, in terms of where they see their industry going in the future, will be key
to developing a system for predicting how the economy will change in coming years,
and preemptively adjusting education to meet these future needs.
In order to undertake the collection of information, analysis of that information, and the
creation of insightful policy solutions for the education system based on that analysis,
the Government will require significant human capital capabilities. If the Government
hopes to be able to undertake these efforts, as well as all the other increasingly complex
and interrelated tasks of a modern government, developing the human capital of its
civil service will have to be a priority.
4.5 The role of human development
in Cambodian human capital investment
Thus, Cambodia must focus in the future on the development of capacity in both
its major economic sectors and the public sector. However, policy concentration on
the skill deficits of only industry or government misses a major dimension of human
capital accumulation policy, especially in the effort to build a strong base for a future
knowledge economy. These are the equity, access and quality of life dimensions that
have been highlighted by successive Human Development Reports by UNDP.
Equity is a major policy objective in almost all fast growing economies of South and
East Asia. The reason is clear. Almost all of these economies, including India and China,
have witnessed a sharp deterioration in equality as economic growth has taken off.
The reasons are many: structural transformation along the lines of the Kuznet’s U,9
widening wage differentials between skilled and unskilled labour due to increasing
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global demand for the former and greater opportunities for entry into global labour
markets, widening inter-regional inequality due to patterns of urbanisation, natural
resource concentration and the urban-industrial agglomeration, differences in
computer and information technology access across regions, and the location of
industry near transport and export outlets.
Two dimensions of the inequality questions are relevant here. First, there is the very
speed at which long standing patterns of income distribution have begun to change
under the joint impact of global capital markets and the structural change of GDP.
China is a good example of the speed with which income inequality (Figure 4.2),
especially in urban areas, can rise. The same is now true of India, Indonesia and more
recently Cambodia (not indicated in figure).
Figure 4.2 Economic inequality in selected Asian countries
Note: Gini Index: a measure of inequality between 0 (everyone has the same income) and 100 (richest person has all the income)
Source: UNDP, Human Development Report 2005, data reworked by the Strategic Asia team
Second, the transition to a market economy combined with the loss of fiscal and policy
space in the global economy has meant a reduction of state welfare provisions and
employment guarantees. The demise of strong labour movements and intra-industry
collective bargaining mechanisms has only weakened the position of labour in the
overall political system. Third, the policy instruments designed to keep inequality at
some socially agreed level are not always effective. Historical patterns of geographical
and income inequality tend to perpetuate themselves, becoming a source of local
social or ethnic conflict on the one hand and of political instability on the other. In
recent years, equity problems in economic growth have worsened due to structural
shifts in GDP, thus increasing the inelasticity of growth to employment on the one
hand and the elasticity of poverty reduction to economic growth on the other. All
this is notwithstanding the fact that the sheer tempo of growth in many countries in
South-East and South Asia has helped to bring down absolute poverty within the span
of a single decade. Cambodia provides a good example of this tendency.
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“...people are
not just units
of human
capital, but
ends of the
development
process itself.“
In the world of a knowledge economy driven by innovation and information technology,
equity has acquired yet another critical dimension. At the root of the success of the
knowledge economy and the explosion of new products and technologies on the
world economic stage is the dramatic dissemination of knowledge to almost everyone
at very low cost and in real time. Innovation and the creation of new products are
outcomes not just of formal education in elite institutions, but also the historically
unprecedented dissemination of all kinds of knowledge in the global economy. Equity
of information access and the interconnections between different fields are two of
the most effective drivers of the new knowledge economy. Thus, the digital divide has
become a matter of such concern not only because it accentuates income inequality
between different regions and people, but also because it robs entire communities
from contributing to innovation processes. As already mentioned above, sustainable
economic growth needs increased human capital both in terms of its quality and
depth, as well as the sharing of knowledge and adaptation of frontier technologies to
local economic signals. Both excellence and equity are key drivers of the knowledge
economy.
Of course human development as distinct from human capital is not only concerned
with the productivity of enterprises and workers. It is also based on a philosophy which
redefines social welfare not just in terms of income per capita and purchasing power,
but also in terms of rights, capabilities and deprivations. This underscores the fact that
people are not just units of human capital, but ends of the development process itself.
Economic incentives are likely to work best when people have access to a minimum
acceptable level of good health, training and education and are free to participate in
the social and political dimensions of life. In this scenario, a long-term expansion of
human capital is not sustainable without at the same time promoting a rise in human
‘development,’ a point increasingly being recognised in the modern literature on the
quality as distinct from the rate of economic growth.
As Tables 4.5 and 4.6 show, despite its decade of impressive growth, Cambodia is rife
with inequalities in many different ways: between urban and rural, between educated
and less educated, between different provinces, across age groups and industries/
occupations. A necessary part of the human capital plan is to determine how much
weight should be placed on equity and human development in the overall programme
of human capital investment. This is not a new dilemma but one which is increasing
in urgency given the incessant excess demand for higher education, increasing labour
mobility and the greater political demands of unemployed or underprivileged youth.
4.6 Human capital and state-civil society interactions
Finally, human capital development is a pre-requisite in the solution of a new category
of policy problems which are difficult to define and may never be solved permanently
but can be managed and kept under tolerable limits. Such ‘wicked problems’ (Box 4.2)
have by now sparked a massive policy based literature. The wicked problem concept
reflects the fact that where issues of income distribution or cultural or ethnic dimensions
of development are involved, the best way to create a solution is to work at creating
a new social consensus on both the nature of the problem as well as options towards
a ‘fair’ solution (Sen 2000). Such community-based agreements need continuous
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interaction and consultation between the state and civil society. They have become
indispensable features of present day democracies although many different models
and processes of arriving at such a consensus exist.
Table 4.5 Cambodia’s predictive poverty rates by province
computed from Commune Database
Province
2004
2005
2006
2007
2008
2009
2010
1-Banteay Meanchey
39.9
38.7
37.1
34.1
32.5
31.4
29.7
2-Battambang
37.8
36.5
35.4
33.3
31.7
29.7
28.7
3-Kampong Cham
33.1
32.1
31.0
29.0
27.6
25.8
24.3
4-Kampong Chhnang
37.9
37.2
36.7
35.6
34.2
32.3
30.4
5-Kampong Speu
41.4
40.3
39.5
37.3
35.2
32.2
30.1
6-Kampong Thom
41.1
40.5
39.3
37.7
36.5
34.3
32.7
7-Kampot
26.6
25.6
25.0
23.4
22.4
20.5
19.1
8-Kandal
27.6
26.2
24.1
21.2
19.7
17.6
15.9
9-Koh Kong
34.8
34.7
32.6
30.7
29.0
26.5
25.1
10-Katie
43.9
43.3
42.5
41.5
40.2
38.6
37.1
11-Mondulkiri
47.0
45.1
44.0
42.4
40.3
38.0
37.1
12-Phnom Penh
6.8
6.9
5.8
0.5
0.3
0.2
0.1
13-Preah Vihear
50.2
48.2
47.2
45.7
44.5
43.1
41.5
14-Prey Veng
33.2
33.2
32.2
30.2
29.1
27.3
25.5
15-Pursat
40.7
39.9
39.0
37.5
35.8
34.1
32.0
16-Rattanakiri
50.7
48.9
46.6
45.0
43.8
41.5
41.2
17-Siem Reap
42.2
40.7
38.8
36.0
34.4
32.3
31.1
18-Preah Sihanouk
31.6
30.7
29.4
24.8
22.8
20.5
19.6
19-Stung Treng
46.1
45.9
46.1
44.3
43.5
42.4
41.1
20-Svay Rieng
32.5
31.6
30.1
27.8
25.9
23.6
21.5
21-Takeo
31.6
30.7
29.2
28.1
26.8
25.2
23.4
22-Oddar Meanchey
46.6
45.9
44.0
42.3
40.6
39.1
36.5
23-Kep
33.6
33.0
31.5
28.6
25.2
22.8
21.4
24-Pailin
41.7
40.5
38.9
36.9
35.0
31.0
28.1
Cambodia
35.1
34.2
32.9
30.7
29.3
27.4
25.8
Source: MoP 2010.
Table 4.6 National poverty line by domain, 2004 and 2007
(in current Riel per capita per day)
Domain
Phnom Penh
Food
Non-food
Other urban
569
647
2,351
3,092
Food
1,568
2,274
384
430
Total
1,952
2,704
Food
1,298
1,965
364
402
Total
1,826
2,367
Food
1,442
2,042
Non-food
National
2007
2,445
Total
Non-food
Rural
2004
1,782
Non-food
Total
384
428
1,825
2,471
Source: MoP 2010.
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“The State is
an important
actor on the
Cambodian
economic stage,
but is likely
to become
even more
important.”
In Cambodia such processes are likely to become more important over time. The reason
is not only the need to deal with the prospect of growing inequality and perceptions of
economic injustice. They will also become important in industrial diversification, e.g. in
mining or in the context of Special Economic Zones, which create economic enclaves
and new forms of social division. Similarly, more industry-driven communication
will be needed between the Government and the private sector. And of course, the
establishment of public monitoring of service delivery, a decrease in corruption in
public procurement, and in the timeliness of service delivery will be essential. Again, the
competence and skill of Government personnel and agencies to continue this public
dialogue and communication are an important aspect of human capital development
as the country prepares for the next round of economic growth.
4.7 Conclusion
The above discussion points to the importance of integrating human capital demands
and deficiencies in the state and civil society sectors as a part of the human capital
investment strategy for a future Cambodia. This is an important omission in current
thinking on the subject. The State is an important actor on the Cambodian economic
stage, but it is likely to become even more important as democratic institutions take
firmer root over time and as the highly prioritised governance reform indicated in the
Rectangular Strategy is implemented.
Moreover, human development aspects of human capital involving greater participation
in development efforts as well as a fairer distribution of its growth outcome are key
dimensions of any strategy of human capital development. The precise balance
between equity and promoting high quality in a few restricted activities and skills
can only be determined by a new social consensus. Public participation also holds the
key to quality monitoring of public goods and services, an endeavour in which new
technologies in E-governance have made major contributions. These are yet more
areas in which the human capital deficit gaps in government need to be closed.
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Box 4.1
Tackling Wicked Problems: A Public Policy Perspective
Avoiding a Narrow Approach
A number of publications have been using the term wicked problem now, starting from the landmark article “Dilemmas in a General Theory of Planning” by Horst Rittel and Melvin Webber, or
the “Wicked Problems, Righteous Solutions” by Peter DeGrace and Leslie Hulet Stahl or the most
recent ‘Tackling Wicked Problems – a public policy perspective’ by the Australian Public Service
Commission (2007) – investigating the scientific bases for confronting problems of social policy
which are difficult to solve, mostly due to the nature of these problems. These problems have
been labeled as ‘wicked’, since they cannot be definitely described or resolved with traditional
approaches.
Wicked problems are not unique to public policy and often carry the following characteristic:
• There is no definitive formulation of a wicked problem. Formulating the problem and
the solution are essentially the same thing. Each attempt at creating a solution changes the
understanding of the problem.
• Wicked problems have no stopping rule. Since you cannot define the problem, it is difficult to tell when it is resolved. The problem solving process ends when resources are depleted, stakeholders lose interest or political realities change.
• Solutions to wicked problems are not true-or-false but good-or-bad. Since there are
no unambiguous criteria for deciding if the problem is resolved, getting all stakeholders to
agree that a resolution is ‘good enough’ can be a challenge.
• There is no immediate and no ultimate test of a solution to a wicked problem. Solutions
to wicked problems generate waves of consequences, and it is impossible to know how all of
the consequences will eventually play out.
• Every implemented solution to a wicked problem has consequences.
• Wicked problems do not have a well-described set of potential solutions. Various stakeholders will have differing views of acceptable solutions. It is a matter of judgment as to
when enough potential solutions have emerged and which should be pursued.
• Every wicked problem is essentially unique. There are no ‘classes’ of solutions that can be
applied to a specific case. Part of the art of dealing with wicked problems is the art of not
knowing too early what type of solution to apply.
• Every wicked problem can be considered a symptom of another problem. A wicked
problem is a set of interlocking issues and constraints which change over time, embedded in
a dynamic social context.
• The causes of a wicked problem can be explained in numerous ways. There are many
stakeholders who will have various and changing ideas about what might be a problem,
what might be causing it, and how to resolve it.
• The planner (policymaker) has no right to be wrong. A scientist is expected to formulate a
hypothesis, which may or may not be supportable by evidence. A designer doesn’t have such
a luxury, they are expected to get things right.
For wicked problems one cannot understand the problem without knowing a set of variables
affecting the issue. As a consequence one cannot meaningfully search for information without
the orientation of a solution concept. The best way to tackle wicked problems is to discuss them.
Consensus will then emerge from the progress of paying out alternative understandings of the
problem, competing interests, priorities and constraints. The application of more formal analysis
tools is impossible before the problem can be articulated in a concise, agreed upon, well bounded manner.
Source: Commonwealth of Australia 2007
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V.
ELEMENTS OF A CONSOLIDATED ROADMAP
FOR HUMAN CAPITAL IN CAMBODIA
5.1 Is there a Human Capital Development Roadmap for Cambodia?
Previous chapters have shown how Cambodia is now faced with an evolving paradigm
of human capital, presenting direct links between investments in human capital
and economic growth. While confronted with this situation, the RGC is faced with
a challenge to shape its development vision in ways that will allow it to strengthen
investments in education, training, skills, vocational training and development of
public-private partnerships (PPPs) for economic gains in the short and long run. The
growing number of initiatives aimed at increasing these PPPs is fuelled by the idea that
economic growth is possible by bringing together all parties involved in the process of
improving human capital, including the Government, the private sector, donors and
society itself. However, while there are several initiatives in place, a comprehensive
view of the investment and involvement plan for those contributing to human capital
development in Cambodia is still not clear. While many of the jigsaw pieces are available,
they lack a unified vision able to mobilise all policies and actors towards a single goal.
“The vision
of human
capital in
Cambodia
going
forward
should
embrace the
realisation
that
education
must start
during the
first years
of life...”
The vision of human capital in Cambodia going forward should embrace the realisation
that education must start during the first years of life and will not end with a university
degree. Indeed, many countries are now faced with the challenge of keeping up with
both social and technological change, and education is evolving to a point where
learning can no longer only be confined to early days of an individual’s personal
development. The 21st century has, in fact, been described as a century of ‘lifelong
learning’ where current and future generations will most likely be expected to return
to learning on more occasions across a lifetime, to refresh knowledge, upgrade skills
and sustain their employability.
If human capital development begins in the early days of life and is sustained through
a lifetime, no short-term processes to upgrade a country’s human capital are available.
If a large portion of people are to eventually graduate from university, the foundations
have to be laid from kindergarten, and therefore decades can pass before additionallyskilled workers enter the labour market – or before mistakes in educational policy
become visible through a shortage of qualified labour.
5.2 Government initiatives (existing Government programmes)
Emphasis on the need to upgrade the skilled labour force in Cambodia has long been
acknowledged. The NSDP 2006-2010 priorities include:
1.
2.
3.
4.
Improvements to productivity and diversification in agriculture
Private sector development and employment generation
Rehabilitation and construction of physical infrastructure
Capacity building and human resource development
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Goal number four relates to human capital deficits addressed in this section of the report.
The NSDP 2009-2013 was compiled with the intention of increasing awareness on the
new challenges that the crisis has brought to Cambodia’s future and development.
Box 5.1
Education, human capital and GDP
Most of the literature on human capital development strategy concentrates on the direct link
between human capital and measured per capita output or productivity growth, and suggests
that interventions should be focused on improving education outreach and outcomes. Human
capital is often narrowly defined by measures of education – usually through the average years of
schooling at primary, secondary and tertiary levels.
Yet a simple glance at the data shows that the regions where the growth rate of schooling has
been the fastest are also those where is started from very low levels. It is therefore hard to believe that a country that increased the average years of schooling from 1 to 2 doubled its stock
of human capital and therefore doubled its output (Cohen and Soto 2006). There is a direct link
between the fact that human capital is an exponential function of the years of schooling, and correspondence between income and years of schooling.
Temple (2000) claims that much of the literature fails to incorporate measures of vocational training and fails to recognise it as part of the definition for human capital. Studies conducted by
Broadberry and Wagner 1994 have show that vocational training is closely connected with corporate production strategies and also national output growth. Yet the extreme variability in vocational training approaches across countries makes it difficult to measure and quantify to facilitate
inclusion in countries’ comparative models. Often it is difficult to draw conclusions given that in
many countries training is often informal, on-the-job, and is not systematically recorded.
There are many different measures of human capital that all have some value. The best available
measure at the moment is the average years of education of the population aged between 25 and
63. As the importance of human capital is likely to increase further going forward, new formulas
will be available combining the quantity and quality of human capital, including experience and
value as well as further education.
The NSDP, in its fourth strategic goal, puts a strong focus on the development of
vocational training policy linked with the labour market, proposing to: provide
basic skills training to people in rural areas to increase income; provide training or
skill development to factory workers in cooperation with employers; continue the
expansion of technical and vocational training to provinces, with entrepreneurial
training programmes; and establish a National Agency for Professions and Employment
as well as employment centres in provinces and mechanisms for the dissemination of
market information.
5.2.1 Current situation vs. future vision
The RGC is undertaking various efforts to advance the levels of human capital in the
workforce. The focus in examining these will be on the two main methods for organising
education and training: formal education and vocational training.
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Formal Education:
Strengthening the quality of education is a critical element for human development
and poverty reduction in Cambodia. Throughout the 1990s, the focus of educational
reform was on supply-side improvements, such as building more schools, increasing
the number of teachers, providing more teaching materials, etc. Since the beginning of
the 2000s, the focus has shifted to more demand-side factors, putting more attention
on providing Cambodian students and families the assistance they need to ensure
school attendance, through programmes such as the Priority Action Plan, which aims
to reduce the cost of education for Cambodian families (Tan 2006).
“Strengthening
the quality of
education is a
critical element
for human
development
and poverty
reduction
in Cambodia.”
The Education Strategic Plan 2001-2005 was a timely contribution by MoEYS to foster
broader equity for education opportunities and to improve the quality, standards
and management of education services. The strategy was based on a Sector-wide
Approach (SWAp), aimed at tackling the enormous challenges in the education
sector while building on partnerships to carry out joint planning and programming
for education at all levels. The SWAp has made mechanisms available to MoEYS for
aligning development cooperation assistance with the needs of the education sector,
while also aiming to reduce the transaction costs of the Ministry’s bilateral transactions
with development partners.
The new country strategy for education, the Education Strategic Plan 2006-2010,
focuses on building upon previous achievements and enhancing equitable access
to education for all Cambodian children. Cambodia remains committed to further
strengthening the quality of education and has committed to further increase the
recurrent expenditure allocation for the education sector in the national budget,
increasing from 183.2 billion riel in 2000 to 742.5 billion riel in 2009.
The formulation of the Education Strategic Plan 2006-2010 reflects the commitment
and degree of responsibility of MoEYS to upgrade the country’s development through
capacity building and human resource development. Upgrading human capital is one
of the main strategies of the Rectangular Strategy in the third mandate of the National
Assembly. The policies have been strategically outlined in order to accelerate the
speed of education reform towards achieving the NSDP 2006-2010, the Millennium
Development Goals 2015 and the Education for all National Plan 2004-2015 (MoEYS
2010).
MoEYS is placing particular attention on capacity building and human resource
development, in order to strengthen the capacity of the nation’s human capital for
technical and scientific skills and to respond to labour market needs for entrepreneurship,
creativity, responsibility, discipline, morality, professional ethics and honesty (MoEYS
2010).
Vocational training:
Cambodia has directed a lot of skills-building efforts to vocational education. This is
the result of the fact that many secondary school graduates are either not continuing
with their education and skills training or are going on to university programmes that
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only lead to unemployment. Before becoming employed these young workers receive
little or no preparation for self-employment and there are very few jobs available in
the formal sector to absorb them. For many, vocational training is the only option to
prepare a basic set of skills for employment.
The objectives of TVET are: to prepare young people for decent jobs, a decent life, and
self-employment; to upgrade the existing workforce over time; and to keep up with
technology development and globalisation. Linking training, employment and selfemployment, and helping graduates find work, are the basis of TVET.
Box 5.2
Government-led human capital interventions in Korea
Several countries have witnessed impressive changes in levels of human capital over the past 20
years. These changes occurred through policies aimed at increasing the average number of years
in education combined with quality skill training. Examples of this can be found in South Korea,
which was able to increase by more than 20 percent the number of students enrolled between
1985 and 2000, and extended the basic number of years of schooling to a total of 13.
This was possible through a clear investment of more than 8 percent of GDP in education and a
political strategy aimed to boost human capital, in the framework of a long-term strategy targeting people from their early life stages.
While it is possible to derive valuable information for growth forecasts, these long-term policy
lags may prevent the implementation of effective economic policy given the short time spans
in the political arena. Higher growth means that the gains in human capital require significant
reforms as quickly as possible, although they will only bear fruit 10 or more years down the road.
In countries like Korea, the institutional framework in education was improved over the past decades to allow a rapid accumulation of human capital through equitable policies aiming to include equity as the most important way to tackle poverty in both rich and poor countries. In fact
differences in educational attainment explain the major part of the differences in income, both
among individuals and across countries.
In the Strategic Plan for 2006-2010, MoLVT outlines its roadmap to develop technical
vocational education and training programmes in response to labour market demands,
while also strengthening the management and provision of job centres. Currently,
vocational training and other short course training aims to provide skills training at a
relatively low cost to students who cannot afford to continue to university.
Vocational training plays an important role in teaching youth the skills they will need for
the workplace, especially poor youth. Given its importance, it is crucial that vocational
training provides the right types of skills at a reasonable quality. Stakeholders have
often stressed the need to raise public awareness of the value of vocational training,
as relevant high-quality vocational training can provide youth with practical skills that
are valued by employers. However, there still is a perception that vocational training is
the second-best option for those who miss out at university. The challenge is how to
correct this misunderstanding. This is partly the result of the divergence between the
quality levels of various vocational training programmes: some are high-quality, while
others lack quality and relevance. Raising the profile of vocational training can only be
successful if there are continuing efforts to improve quality and relevance.
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It is also important that vocational training systems have appropriate links to the
broader higher education system. Vocational training qualifications are of great
value to students if they are used, recognised and accredited in some way by higher
education providers, such as universities. This enables students to use vocational
training as a platform to further study. Education providers and Government ministers
should explore ways to maximise these linkages (CAMFEBA 2008).
The 2008 Strategic Plan for Technical and Vocational Training recognises the need for
the continuous expansion and improvement of work force skills in order to increase the
rate of economic growth. The NTB has a mandate to respond to the NSDP 2006-2010
framework, with a National Technical Vocational Education and Training Development
Plan. The Directorate General of Technical and Vocational Education and Training
(DGTVET) manages the national implementation strategy of the NTB. The DGTVET,
under direction of the NTB aims to: develop and sustain a TVET system meeting the
needs of the country for economic and social development, in line with the Rectangular
Strategy; provide enterprise with a skilled and adaptable workforce; and respond to
the life-long needs of individuals for decent jobs or self-employment with appropriate
training.
“Vocational
training
qualifications
are of great
value to
students
if they
are used,
recognised
and
accredited
in some way
by higher
education
providers...”
The first NTDP was approved by the NTB in 2006 and outlines the two-track development
approach of the TVET with an immediate priority on poverty reduction. Two financial
mechanisms have been established to sustain the process: the National Training Fund
supported by Government funds and the Education Sector Development Programme
(ESDP II) supported by ADB.
The government of Cambodia sees that for the near future the best short-term plan
for poverty alleviation and growth (especially in rural areas) is through vocational
training. The NSDP aims to increase the resources of rural areas through increased
attention to productive activities like agriculture, rural development and health and
education in order to increase and enhance human capital and better contribute to
overall development. The government of Cambodia also acknowledges the increasing
pressure faced by young people graduating from secondary school who have few
training options, and the difficulty to recruit post-secondary students to attend TVET
institutions. The government is therefore developing ways to strengthen communitybased skills development with a new emphasis on strengthening institution-based
TVET.
The NTB’s mandate is to link skills development with the demands of enterprises and
communities, while keeping in mind economic change and the attendant changes
in the demand for skills, as well as the current supply of skills. However, it should be
noted that while this mandate indicates close cooperation between the NTB and the
private sector, in reality there are few PPP efforts or concrete engagement between
the two sectors.
Expansion data for most industries is important to signal a growing demand for skilled
workers and to highlight those areas with the most rapid growth that may require
the earliest attention in terms of needs analysis. Distribution of employment across
different sectors might also indicate the importance of investment in rural productivity
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“Reforming the
agenda for
private sector
involvement in
human capital
development
is a key priority
for Cambodia.”
as a focus for TVET in poverty reduction. This will require action in matching the growth
of different sectors with reviews of the policies needed to address skilled labour needs.
A closer focus on understanding where the jobs are in Cambodia will help to forecast
the distribution of employment and skills to provide inputs and leadership to TVET.
Government intervention has focused on this short-term strategy to fill the skill gaps
of the majority of youth in Cambodia.
Table 5.1 Growth rates of industry by sector
are shaping what is being taught in vocational education in Cambodia
Garments
Food, beverages and tobacco
Other manufacturing
2005
2006
2007
10.3
21.9
17.6
8.0
2.5
5.0
10.2
8.6
5.5
Electricity, gas and water
4.5
4.7
6.3
Construction and mining
20.4
15.5
11.8
Total industry
12.3
17.1
14.1
Source: National TVET Development Plan 2008
5.3 Private sector and government-private sector initiatives
Reforming the agenda for private sector involvement in human capital development is a
key priority for Cambodia, although progress in hindered by significant fragmentation.
The Government’s rectangular strategy and the NSDP have a vision of private sector-led
growth, however, progress in the sector is constrained by institutional fragmentation
on the Government side. This is compounded by fragmentation of efforts on the
development partners’ side.
Government intervention in skill building is no longer limited to ‘formal training’, and
current strategies on human capital development are shifting to involve the private
sector. However, in order to engage the private sector a number of incentives must be in
place. Entrepreneurs will require an ‘enabling state’ providing direction, policy, support
services, and social and physical infrastructure. With these state support systems, the
private sector will be more willing to participate in human capital development by
ensuring their business interests are met. For example, returns on this involvement
could include setting a transparent agenda with accountability of the public sector
and the optimal use of resources based on agreed priorities by negotiating with the
government and civil service.
A number of initiatives are in place, including the Government-Private Sector Forum,
which has so far received a favourable evaluation. The system has been able to deliver
both improved reform processes and direct and measurable economic impacts. Some
examples of their success include the consultation on investment and tax law, the
introduction of private sector monitors within the Customs Department, and improved
labour standards. On the other hand, the Chambers of Commerce in Cambodia have
played a very small role in trying to engage the Government with the private sector. The
general position of firms seems to be that if they are not required to become members
of the Chamber, they will not voluntarily join (Maddock unpublished).
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Box 5.3
Distance learning opportunities
National Autonomous University of Mexico:
Investing fees to meet the demands of the knowledge economy
Distance learning has now been widely made available to the people of Mexico, helping people
to pursue their studies at their own pace and time, and it has become an excellent alternative to
formal education systems. For the professional and the elderly, various modes of distance learning have emerged as a useful alternative for continuing their education, promoting the idea of
‘lifelong learning’. The introduction of fees in the 1990s has helped Mexican universities to upgrade their capacity to take advantage of the knowledge economy, and information technology
has also contributed significantly to the advancement of distance education in Mexico. Distance
learning institutes in Mexico offer course websites, videotapes, DVDs, audiotapes, audio CDs, and
CD-ROMs, depending on the nature of the course, so that face-to-face interaction is not required.
As distance education gains popularity among students, more and more universities in Mexico
have started offering various courses in this manner.
Online learning in Spanish universities*
The Open University of Catalonia (UOC) in Spain has a long history in the field of online learning,
and the university has now become 100 percent online. Students are the centre of the academic
programme and the university is becoming a main point for new learning models. The university
has moved from the stage where professors are giving lectures to a point where students, mentored by their faculty members, can pursue the knowledge that they need directly. For example,
the UOC’s virtual desktop allows students to navigate at will through tabs that feature planning
and scheduling, teacher and classmate communications, a digital library, web resources, testing
and assessment.
Many of those who attend the UOC are full-time workers, or have families or other commitments.
They come to the UOC mostly to pursue post-graduate degrees, to obtain specialised certification, or to complete their bachelor’s requirements. Inspired by technology and by the knowledge
economy, the UOC recognised that distance education is not only about recording videos and
putting them online, but creating a more proactive and interactive way to help students in their
learning process.
The computer is not the only interface for high-quality distance learning, and mobile technologies will allow an increasingly diffuse array of interactions, extending the reach and accessibility
of educational offerings to more students.
Source: *The Economist Intelligence Unit. 2008. “The Future of Higher Education: How Technology will Shape Learning”.
Despite challenges, there have been increased pushes for the private sector to work
with the Government. SMEs (and Cambodia has many of them) were identified as a
problem area and they have been encouraged to look at strategies such as working
in clusters and developing the skills of key workers to act as mentors to less skilled
workers. Workers were also encouraged to seek the support of the Government to
encourage industries to train their workers, and to develop strategies for negotiating
with the Government for incentives. With the high costs of training and the difficulties
in keeping pace with changing technologies, partnerships are becoming more and
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more important as a means of sharing the cost of training and meeting key challenges
in skill development (MoLVT and ILO 2010).
Box 5.4
Unfolding an economic renaissance in Asia
The World Bank’s study on the East Asian ‘miracle’ gave some of the credit for East Asia’s (including
Thailand, Indonesia, and Malaysia) success to the relationship between entrepreneurs and the
state. In particular, states were said to have engaged in productive discussions with their entrepreneurs, receiving and giving guidance on industrialisation. While this does seem to characterise
the northern tier of Asian countries, with Japan as the foremost example, this kind of consultation
has been nascent at best in Southeast Asia. Yet the countries there have made some efforts to
institute consultative mechanisms. Malaysia is probably the furthest along in this regard, and its
major formal consultations only began in 1991. As of 1993, Indonesia had no formal governmentbusiness links for policy coordination, and although Thailand did establish such links, there is
considerable debate over whether or not they have been effective.
Source: World Bank 2007b
There are incentives for both sides in this, since the private sector wants good and
predictable circumstances for growth, while the public sector needs the tax revenues
and job creation that growth provides. For the private sector, this often means
helping shape the actions of sub-national administrations in getting funds to finance
infrastructure and services which firms want. NGOs are also often part of this process,
particularly in representing the needs of lower income groups and as watchdogs
(Maddock unpublished). Engagement is often through representative organisations.
There are Chambers of Commerce in Cambodia, but their contributions are hobbled
by state oversight and a focus on larger firms. There is currently very little private
sector engagement at the sub-national level and limited arrangements for it to take
place. There are, nonetheless, informal associations which, in their discussions with
government, are moving beyond immediate contract-related questions to discussing
broader matters.
Additionally, the sub-national structure is important in encouraging PPPs. Given
people’s unwillingness to travel long distances to get training, this will probably
be partly under the sub-national administration’s control (Maddock unpublished).
Financially and economically, the sub-national administration should welcome private
sector provision of services since it means that the Government does not have to
provide them. The public sector will therefore be concerned with (and planning will
have to take account of ) the services that the private sector will not provide. These
can be ‘pure’ public goods where there are no revenues or ‘club goods’ where the
administration puts in the infrastructure and charges a fee for use. In many such cases,
PPPs could be possible.
Some key public-private initiatives in the field of vocational training in Cambodia
include commune- and enterprise-based training. Often, education systems are
centred on buildings and schools, but TVET is not necessarily centred in this way. It
is often very difficult for poor villagers to leave farming for job training. Thus, training
for villagers must be short, often only part of a day, and should be close to village
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work sites to reduce travel costs. Institutionally-based residential learning models are
expensive and not always accessible to those who can most quickly apply training.
One strategy entails providing funding for commune- and enterprise-based training
to be assisted by Provincial Training Centre (PTC) staff. PTCs will receive 10 percent of
the value of this training in payment for assisting in developing and finding trainers to
implement the training plans. Ensuring that National Training Fund funds are allocated
to support training that is demand driven and community/enterprise responsive is key
(NTB 2008).
5.3.1 PPP financing of TVET
“International
experience
demonstrates
that
financing
must be a
partnership
of the state,
enterprise,
communities
and trainees.”
International experience demonstrates that financing must be a partnership of the
state, enterprise, communities and trainees. Beneficiary financing of TVET (NTB 2008)
is the main goal of developing and maintaining a system that meets real needs by
responding to real demands for skills. To achieve this, a PPP is required. However,
stakeholders must be involved in the design, decision-making and the delivery of
TVET if they are expected to support the programme. One strategy entails developing
an employer-based levy on payroll or a payroll tax to enable enterprises to support
TVET and develop enterprise co-managed Sector TVET Centres. Setting up Enterprise
Sector Councils and beginning the process of inviting financial participation in sectorlevel training is another. Establishing an Enterprise Advisory Council to the NTB could
also help provide private sector input to the NTB.
The Government should also think about the possibility of a levy-grant system or a
corporate profits tax transfer with the Ministry of Economy and Finance. The government
could ask Commune Councils to contribute to training costs in a Voucher System, and
while it is recognised that in many cases no financial contribution is possible, a start
must be made to changing attitudes from entitlement to participation. Trainees could
also be asked to make a small contribution as experience shows that even a small
contribution greatly increases trainees’ commitment.
5.3.2 PPP expanding the provision of TVET
The Government’s central role in TVET is to ensure the development of an overall
system, access for all, availability of a skilled workforce to meet economic needs,
and quality of provision. To achieve this, private sector providers need incentives to
enter the training market in response to the demand for skills. One strategy entails
training systems being purchased from qualified private sector training providers by
the NTF and by a Commune/Enterprise Voucher System. Each PTC could develop a list
of private sector and NGO training providers in the province, which will be asked to
register with the provincial branch of the National Training Trainer Network as the first
step in qualifying to provide training in the voucher programme (NTB 2008).
5.4 Initiatives of international agencies and donors
Aid effectiveness has evolved over the last decade in Cambodia, and actions have been
categorised into three broad areas: strengthening programme-based approaches
and sector strategies; capacity development and the use of national systems; and
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“Aid
effectiveness
has evolved
over the
last decade
in Cambodia.”
promoting sound partnership practices. However, despite the valuable efforts of these
organisations, it can be seen that their activities are largely disparate and do not follow
an orchestrated plan or framework. While all are working towards increasing human
development, and are working with the Government to enhance this, there is not
enough coordination between the donors themselves, leading to redundancies and
repetition in the work being done.
5.4.1 Asian Development Bank
The ESDP II was part of the first NSDP and approved in March 2006, was supported by a
loan from ADB. ESDP II has been implemented in seven provinces (Takeo, Kampot, Siem
Reap, Battambang, Kampong Chhnang, Stung Treng and Svay Rieng), but is still at the
pilot stage. Currently, MoLVT has a new project created through an ADB grant, which
will strengthen TVET and will commence in 2010 and continue until 2016, operating in
24 provinces (MoLVT and ILO 2010).
With the assistance of the ADB Loan, demand-driven TVET is being developed in
DGTVET institutions. The move from a supply focus to a demand focus requires a
shift in attitude in both DGTVET and in the institutions. By using a carefully staged
series of pilot projects which link institutions to the needs of communities, institutions
understand their revenue is dependent on responding to demand and not directing
training regardless of employment outcomes. The Voucher Skills Training programme
gives target communes a voucher worth up to US$4000 per year for three years to
meet the commune economic plan (NTB 2008).
One example of the success of this Voucher Skills Training Programme is the fact that
it has trained over 154,000 rural residents in skills they chose, based on opportunities
in their own villages and provinces. The programme will be extended to all provinces
in the country using both the government budget and grant assistance from ADB
(MoLVT and ILO 2010). NTB will seek ways to expand and sustain the Voucher Skills
Training Programme and to more closely link the training provided for new TVET staff
to ensure that they meet the evolving needs of TVET institutions.
5.4.2 International Labour Organization
The ILO has supported skills development in Cambodia since 1990 and has seen
a number of initiatives come to fruition. Support has been provided to expand
opportunities for quality employment, effective social dialogue and improved social
protection. ILO has identified an action strategy for Cambodia, taking into account the
current opportunities and interests of the country in upgrading its human capital (MoLVT
and ILO 2010). This strategy includes: committing to the government’s Rectangular
Strategy, clearly mentioning employment creation and increasing productivity as a
central pillar of the strategy; enhancing poverty reduction debates and discussions
among the key public figures, researchers, civil society and international partners; and
improving the labour force deployed in the informal sector.
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Selected actions by ILO in various areas include:
• Centralising employment: ILO has worked with MoLVT to develop a national
strategy for employment which incorporates gender equality and addresses the
needs of specific vulnerable groups and rural workers.
• Training and skills development: ILO has provided technical support in the
implementation of NTVET development plan, and the MoLVT and MIME Gender
Mainstreaming Action Plan, and has promoted the linking of training to industry
and employers’ needs. It has also worked towards improving skills policies and
systems through a progressive skills certification process adapted to Cambodia’s
needs. In response to the financial crisis, technical assistance has been provided
to MoLVT in the complimentary areas of training and employment needs
assessment for staff, as well as technical assistance and guidance on TVET.
• Employment services: In 2009-2010 ILO established and sustained a network
of job centres in four provinces. Alongside this, ILO also implemented a range of
capacity building exercises for the newly created National Employment Agency
(NEA), including comprehensive training in employment services, development
of standard operational guidelines for job centres, and a study tour to China for
NEA and job centre staff to observe the workings of provincial and district level
employment service centres.
• Institutional capacity for extension of social security: ILO has assisted MoLVT
in drafting legislation and designing the management and administrative
structures for the establishment of an employment injury insurance scheme.
It also has assisted MoLVT, Ministry of Social Affairs, Veterans and Youth,
and the Ministry of Health in the development of social security schemes
including drafting legislation, conducting financial studies, and supporting the
implementation of such schemes.
5.4.3 United Nations Development Programme
Key priority areas for the 2011-2015 United Nations Development Assistance Framework
(UNDAF) are aligned with the Government’s rectangular strategy and focus on
Cambodia being able to meet its Millennium Development Goals (MDGs). Objectives
include promoting and supporting: economic growth and sustainable development;
health and education; gender equality; governance; and social protection.
The new Country Programme Action Plan 2011-2015 for UNDP has been designed,
aligning itself with the UNDAF, to respond to the national priorities in the NSDP, with
a special focus on helping accelerate progress towards the Cambodia Millennium
Development Goals before 2015.
The main focus will be in reinforcing the themes of the MDGs and poverty reduction,
environment and sustainable development, democratic governance and gender
equity.
With the aim to strengthen national and sub-national capacities to develop a more
diversified, sustainable and equitable economy, UNDP will support the design of
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policies and strategies necessary for emerging sectors to expand and contribute to
poverty reduction. Human capital development strategies will be supported to help
generate the skills the private sector needs.
5.4.4 World Bank
The World Bank lends money to the Government of Cambodia through the International
Development Association. Projects focus on rural infrastructure and rural development
as the majority of the poor live in rural areas. The Bank is currently adopting a new
Country Assistance Strategy (CAS) for Cambodia, with a focus on governance and
poverty reduction and sources of economic growth.
Through the CAS, the World Bank has outlined the priority areas to assist client countries
with their own development programmes. It includes lending, studies, and forms of
technical assistance. In the 2005-2008 strategy, the Bank identified governance issues
as the primary obstacle to sustainable poverty reduction in the country, with assistance
also focusing on achieving the Millennium Development Goals and supporting
strategies and investments needed for their attainment. Over the past decade the
World Bank has been actively working to fill the gaps between uncoordinated donorled aid, which had often slowed down the development of good governance. The World
Bank strategy has focused on lessons learned, drawing attention to a greater focus on
governance throughout the country programme, improving donor coordination and
partnerships, and on the need for a clear focus on development results.
The World Bank’s assistance to Cambodia has helped to produce positive changes on the
ground in the field of education. Through an education quality improvement project,
teachers, administrators and communities from Takeo, Kandal and Kampot provinces
are now working together to identify school enhancement activities financed through
annual school cluster grants in order to improve children’s education. Some of the
activities include building new libraries, investing in educational materials, providing
teacher training, and improving the environment around schools.
Furthermore, the IFC’s Mekong Project Development Facility is supporting the
development of private SMEs in Cambodia. One of the main priorities of the Facility is
to integrate in-house and job training programmes for impoverished women and their
children, one of the major poverty fighting initiatives.
5.4.5 European Union10
European Commission cooperation in Cambodia is designed to support the RGC’s
policies, as reflected in the NSDP. It also follows the overall development cooperation
policies of the EU. A limited number of focal sectors have jointly been agreed in the
EC-Cambodia Country Strategy Paper 2007-2013:
1. Support to the NSDP (which includes support to Public Financial Management
Reform)
2. Support to basic education
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The EU has provided substantial development assistance and maintained a close
relationship with Cambodia. The EU-Cambodia Cooperation Agreement provides
the framework for relations and sets out areas in which cooperation will take place.
Cooperation between the EU and Cambodia also takes place in a regional setting
through ASEAN and ASEM.
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VI. A HUMAN CAPITAL DEVELOPMENT ROADMAP
FOR CAMBODIA, AND REASONS FOR OPTIMISM
In order to create a plan for Cambodia to improve its human capital development and
education system, both short-term and long-term plans are vital.
6.1 Short-term interventions
6.1.1 Filling the skills gap
“A variety of
sectors are
facing great
pressure in
Cambodia
to upgrade
hard and
soft skills of
their
workers...”
It is clear that training people is the first step to matching the needs of employers. Basic
training, however, might not be sufficient given that trainers often do not take into
consideration what people expect to get out of a training exercise. Assessing people’s
interests and skill levels for potential employment in skilled technical positions is equally
important. By focusing on the foundation skills necessary to be successful, training
programmes should also be directed to incorporate apprenticeships, certificates and
programmes, and should focus on upgrading the potential skills of the individual.
6.1.1.1 Conventional training versus an all encompassing approach
Conventional training is necessary to cover essential work related skills, but in Cambodia
a more progressive and positive approach is also needed. For this reason, it is important
to understand the most effective ways to develop people and how to upgrade the
country’s human capital by moving away from conventional methodologies for
skills training. People in Cambodia undertake a variety of work-related training, but
ultimately might not find it worthwhile as there are poor salary prospects which will
not bring them out of poverty. When moving away from a notion of providing ‘basic
work-related skills training’, and shifting to one centred on enabling ‘learning for
people as individuals’, the impact of training may expand in ways beyond traditional
work skills and knowledge by creating more exciting and motivating opportunities for
people and employers.
A variety of sectors are facing great pressure in Cambodia to upgrade hard and soft
skills of their workers, yet currently there is no mechanism to facilitate and encourage a
person’s development and fulfilment and to improve work attitudes, beyond traditional
training. Organisations which are able to approach training and development from
a more wholesome, worker-oriented standpoint will be able to encourage people to
work and perform well, and people will tend to remain at the same company longer,
enabling them to increase their relevant skills and consequently their productivity, as
well as help train others.
Of course, corporate understanding and expectations about what training should
include cannot be changed overnight. Most sectors see training as being limited to work
skills, but if training is seen in terms of ‘developing people’, training should not only be
focused on skill training but should also include policies aimed at enabling learning,
facilitating meaningful personal development, and developing the relationship
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Traditional trainings often forget about providing guidance on soft skills, something
that employers normally expect people to have. Training should thus focus on a wider
approach which takes into consideration anything that can help a person to grow
in ability, skills, confidence, tolerance, commitment, initiative, inter-personal skills or
understanding.
Additionally, conventional skill training gives people new techniques and methods,
but it will not develop an individual’s maturity, belief, or courage, all of which are
essential for the development of strategic capabilities. Acquiring learning experiences
for an individual’s personal development and fulfilment is connected to performance
and capability, but is especially dependent on a person’s attitude and maturity. When
people develop confidence and integrity, they become more proactive, solutionfocused and responsive, and this helps to develop the essential drive for people to
grow and change.
6.1.1.2 Providing effective training for new employees
Effective training for junior staff is particularly important and employers should
undertake proper induction training. This is because good induction training ensures
new employees are able to settle in quickly and happily. Induction training is more
than just skills training; it is about the basics that more senior employees all take for
granted. New employees need to understand an organisation, its mission and goals,
and be clear about its methods, timescales and expectations.
Induction training principles are based on the basic codes of conduct and soft skills, and
are essential for new people to settle into and enjoy their jobs. Trainers should address
newcomers’ personal development, long-term goals, and opportunities. Mentoring
and proper coaching should be used along with formal structured training.
6.1.1.3 Training tips
It is difficult to provide a standard set of skills that are necessary for personal
development and the facilitation of learning, since the nature of learning involves
wide development methods and experiences. It is therefore not sufficient to establish
training around a job description. It is important to go beyond skills, establishing a
behaviour set, although of course this is more difficult to assess. There need to be
further studies of training, qualifications, job grades and pay reward levels, since these
activities are inevitably linked and the connections should be visible and understood.
Beyond conventional work skills, issues of personal development and learning, for life
and not just for work, are the most significant areas of personal development policy
makers need to focus on.
Post-secondary educational institutions and employers should work together in
innovative ways to meet the needs of today’s students and the growing demands for
skilled labour. Training programmes will give students a clear and well marked path
through vocational training and into a growing field of well-paying jobs. Additionally,
training centres should partner with educational institutions, industrial sectors and
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government and focus on creating a pool of workers that can meet the needs of their
country’s economy.
Effective training should be able to provide structured models for entry into skilled
technical positions, with pathways to higher level jobs in a variety of work settings.
If successful, this type of policy could help improve the lives of low income young
adults by providing them with effective methods to not only gain the skills to avoid
unemployment, but continue building on those skills in pursuit of a career and an
improved life. Doing so will provide jobs to those who need them and supply industries
with skilled workers while at the same time strengthening the nation’s economy
by increasing the capacity of its labour force to not just perform menial labour, but
also to create value-added opportunities for themselves, their companies and their
industries.
“Education
has been
at the
centre of
anti-poverty
and
pro-growth
policies in
developed and
developing
countries...”
6.1.2 Stopping school drop-outs
Students often report a variety of different reasons for dropping out of school (as
discussed in Chapter 2), so the approach to prevent this phenomenon has to have
a multi-dimensional approach. These strategies include mentoring, tutoring, service
learning, alternative schooling, and after school opportunities.
Education has been at the centre of anti-poverty and pro-growth policies in developed
and developing countries, and it is seen as a key determinant of development and to
the ability of a country to keep up with the fast-paced move towards technological
development. This has been the basis of a world-wide focus on school drop-out
problems and a number of policies have aimed to reduce school drop-out rates (for
instance, the introduction of free secondary school education and an increase in
the compulsory school leaving age). The evaluation of this programme can provide
valuable information on whether subsidies, which can reduce the cost of education,
can reduce school drop-out rates. The impact of subsidies could be quite substantial,
especially for those from poorer backgrounds, given that both boys and girls coming
from low socio-economic background have very high drop-out rates, and cash transfers
could prove effective in stopping or slowing the drop-out rate for the most vulnerable
groups.
6.1.3 Addressing unemployment in Cambodia
through poverty infrastructure development, as a crisis response strategy
Countries are affected by a financial crisis in different ways, and countries with economies
that are heavily reliant on exports are generally more affected than economies
with large domestic markets. At higher risk are those countries that were already
vulnerable before the crisis and have few coping mechanisms, and those paying the
highest consequences are often the poor and their dependent families. Crisis response
measures need to target vulnerable rural and urban people whose livelihoods are likely
to be adversely affected by the crisis. These groups require additional social assistance
as they are often excluded from economic stimulus packages, if they exist in the first
place.
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“Crisis response
mechanisms
require
international
organisations
and
governments
to work
together...”
Box 6.1
The Education Maintenance Allowance*
The Education Maintenance Allowance (EMA) was an initiative piloted for the first time in 1999
in 10 education authorities in the United Kingdom. The scheme paid benefits to 16-18-year-olds
that remained in full time education after year 11, when education ceased to be compulsory. Payments included: weekly allowances (during terms only); a retention bonus every term for those
attending consistently; and an achievement bonus paid at the end of the course if students fulfilled the targets agreed to in the learning agreement signed by parents and students when joining the EMA programme. The maximum payment, of UK£30-40, was allocated to people whose
family income was below UK£13,000 a year. Another scheme with smaller incentives was in place
for families earning between UK£13,000-30,000 a year.
The EMA resulted in growth in participation, indicating that this type of policy does have an
effect. The programme had a positive and significant effect on the post-compulsory education
participation among eligible young people.
*Deardon et al 2010
Crisis response mechanisms require international organisations and governments
to work together to address the crisis and mitigate impacts. Cambodia has been
particularly vulnerable to the global financial crisis because of its openness to trade
and investment. Poverty is still widespread, while the near-poor are at risk of falling
back into poverty. Cambodia lacks the fiscal space to achieve a stimulus package. The
government developed a strategy for social protection in cooperation with development
partners, planning to create social safety nets that can reduce the negative impact of
crises on the poor and vulnerable. Social safety nets comprise targeted cash and inkind transfers, which included employment intensive public work schemes.
Economic stimulus packages and social safety nets provide an opportunity to enhance
the job content of the crisis recovery. Countries need, however, to have sufficient fiscal
space to have a stimulus package in place, whereas poorer countries like Cambodia
will be more dependent on international assistance to develop their social safety nets
to respond to a crisis.
Cambodia lacks the fiscal space to design and implement an economic stimulus
package. To mitigate the effects of the recent crisis it was decided to reinforce the
provision of social safety nets. Various social safety nets have been used in the country
to reduce poverty and assist the vulnerable in coping with economic and social shocks.
Infrastructure and public works have been integral components of such safety nets
(cash for work, food for work).
Reliance on social safety nets to mitigate the impacts of an economic crisis in Cambodia
will require adequate and dedicated financing. The development of an affordable and
effective social safety nets system in poor developing countries needs development
partners to contribute to financing. According to ILO, Cambodia lacks an integrated
system or sustainable programme which can respond to this and other crises once
they occur. Current efforts are not enough, they are fragmented or uncoordinated,
and joint efforts are needed to develop social safety systems that are affordable and
sustainable for the Government.
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Box 6.2
Social safety nets and supporting the unemployed
In today’s increasingly volatile economy, working individuals and families need strong safety
nets that provide financial support and retraining and job search assistance in difficult economic
times. In developing countries, however, existing unemployment safety nets have failed to keep
pace with the changing labour force, especially the growth in women, part-time and low-wage
workers.
Low-wage workers are particularly hard hit by unemployment and are much more likely to experience joblessness than their higher-wage counterparts. With unemployment so prevalent, a
country’s economy counts on unemployment insurance benefits to smooth out the unexpected
hardships that hit workers and their families when they lose their jobs. These benefits enable
workers to escape temporary poverty and lasting financial hardships caused by job loss.
The notion that creating societies with strong social safety nets, such as unemployment insurance, results in a diminished desire to work is not necessarily true. Welfare programmes and social
assistance programmes display evidence suggesting that in societies with strong social safety
nets programmes, there is no diminution of the happiness and satisfaction that working brings
for the majority of workers.
In the Organisation for Economic Co-operation and Development there are various types of programmes that provide a large number of examples of potential models for developing countries.
While programme rules differ substantially from country to country, the following are some main
types of social transfers:
• Minimum income programmes, where the government is able to provide minimum income
financial assistance for people without resources
• Housing benefits, supporting housing-related costs of various forms
• Family benefits, benefits directed towards families with children to support the development
of the family
• Benefits for lone parents, attempting to mitigate the high poverty risk for single parents
• Employment-conditional benefits for able-bodied individuals, in an attempt to ensure that
at least some incentive to work is maintained; allowing benefit recipients to work a certain
number of hours without stopping eligibility or taxing the full amount of the income earned
while re-entering employment
• Childcare benefits, financial support for families with small children in order to aid in childrearing
Pressures across many of the developed countries have driven the production of policy reforms
for social services in a few common directions. Traditionally, social safety nets were designed to
protect against old age, short-term unemployment, disability and low income. Recently, however,
social protection policy regimes have adapted to address:
• Increasing long-term unemployment, a result of a severe market change and the globalisation of production causing a reduction in the number of unskilled jobs
• Population aging, which has led to increasing dependency not only on social insurance but
also on targeted social assistance for the low-income elderly
• Changing family structures, with an increasing number of single parents
• Funding and delivery tensions, between central and local authorities, with regional governments demanding more authority over the financing and administration of social protection
benefits
Developing countries can learn from the experiences of developed countries, and use their social
safety net systems as case studies from which to pick and choose practices best adapted to their
particular situations. Designing model policies and generating the empirical research needed to
document best practices, especially during recessions, will be key to stimulating the economy
and relieving hardship.
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“It is also
essential that
the manner in
which learning
outcomes are
acquired and
assessed
is made
more flexible.”
6.2 Short to long-term interventions
6.2.1 Vocational training
Technology and information technology are developing fast, and the labour market
needs highly qualified manpower. Weak PPPs, especially among the TVET institutions,
do not create links with industries, and schools and are not able to fully provide
people with the skills needed in the labour market. Lack of labour market information
systems prevents stakeholders from understanding the requirements of the market.
Capacity building of TVET instructors is limited and some skills do not have instructors
or mentors. Materials provided by TVET are obsolete. Curriculums are not flexible and
TVET institutions are time-based, trainer-based, and school-based. Citizens must be
able to acquire the skills, knowledge and competencies required of them in today’s
knowledge-based economy. Vocational education and training plays a key role in
ensuring that the labour market is open to all.
It is also essential that the manner in which learning outcomes are acquired and
assessed is made more flexible. This includes the need to improve the provision of
TVET by employers, traditional training providers and higher education institutions,
all helping to validate skills acquired outside of formal education and training. At the
same time, the pathways between TVET and higher education must be opened up
and tertiary TVET programmes should be developed. The transition from training to
employment as well as between jobs must also be facilitated, to which end guidance
and counselling services should be provided.
Improving the quality and efficiency of education and training and of teachers and
trainers is the key to increasing the relevance of TVET for the labour market. In order to
improve the quality and efficiency of vocational training there need to be systems for:
quality assurance, to be implemented at the national level on the basis of internationally
agreed standards; continuing the development of skills and competencies of teachers
and training systems, reviewed in light of their evolving roles; fostering the development
of key competencies together with vocational skills that are relevant to market needs,
in particular through different forms of work-based learning; and creating forward
planning tools to match skills and jobs, and partnerships with relevant stakeholders, in
order to strengthen labour market relevance.
Vocational training should also be focused on as a means to promote equity, social
cohesion, active citizenship and inclusive growth. Disadvantaged learners may benefit
more from non-classroom-based learning that is relevant to the country/region’s
labour market. Integrated in mainstream technical and vocational training, training
should be flexible and modularised, providing individualised learning pathways.
Social mobility can also be strengthened by facilitating the transition from vocational
training to higher education systems, and accessible and targeted guidance services
must be put in place.
Enhancing creativity, innovation and entrepreneurship in the framework of technical
and vocational training is important. Vocational training should foster creativity and
encourage risk taking and experimentation. Accessible, flexible, experience-based, and
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active learning should be promoted in Cambodia. Education and entrepreneurship
should also be promoted in order to instill a sense of initiative, creativity and the ability
to actualise ideas.
Furthermore, dialogue and mutual learning should be developed and exchanged with
the international community through regional vocational training networks, and there
should be structured cooperation with the view to improve: transnational collaboration;
regional development; and legal management of mobility. Cooperation in research
activities and evidence-based policy-making should be further strengthened with
international donor organisations.
Given these target areas, the following policy interventions should be considered:
1. Strengthen existing TVET mechanisms to address current gaps. This
policy entails pushing the NTB, Advisory Industrial Technical Committees and
the Provincial Training Board (PTB) to provide more activities focused on the
outcomes needed to meet the requirements of Cambodia’s current industrial
development. This policy needs to be complemented by activities aimed at
strengthening and expanding PPPs, especially providers of TVET, and link them
to industries by establishing advisory councils and promoting liaison between
offices, curriculum development units and instructors working with industries.
This strategy would ultimately expand to develop a national committee on
skills and standards led by the labour market itself, increasing Cambodia’s
competitiveness within ASEAN.
2. Improve the quality of TVET teaching and curriculum. This policy would entail
moving curriculum from time-based and trainer-based to a modular-based,
competence-based or specific sector-based focus. This entails developing
and upgrading programmes to be located at regional centres, developing
new technical teacher training programmes with more hands-on skills and
business development knowledge, as well as direct working knowledge of the
industry and its requirements. Integrating small business programmes into
TVET curriculums, with graduates having specialised skills and knowledge of
small business, could further complement this. TVET should also encourage the
promotion of exchange programmes for sharing experiences, which could in
turn improve the quality of monitoring and evaluation.
3. Improve the quality of TVET facilities and equipment. Expansion of TVET
could improve the coverage of people receiving technical training. Upgrading
and equipping training centres to equip them with new workshops matched
with labour market needs should be a priority.
4. Strengthen regional training centres, making programmes more accessible
to people throughout the country. Such a system could be complemented with
TVET institutions under MoLVT to conduct skill courses for drop-out youths
from the secondary general education levels.
5. Expand private sector or NGO providers of TVET, and ensure the quality of
instruction. This should be combined with the provision for registering private
sector trainers as a system of quality control over the services provided.
6. Expand the ILO Job Centre Programme to match training with industrial
demand. This policy could lead to aligning training with enterprise demand for
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“Policy makers
in almost
all countries
agree on the
importance
of education
and skills
to ensure
future
economic
prosperity.”
skills, while putting the NEA in place as a Special Operating Agency under the
NTB.
7. Focus on the decentralization and deconcentration of TVET programmes,
developing PTBs as extensions of the NTB to assess local demand for skills and
propose training to the NTB. TVET institutions should also be strengthened to
assess and respond to local industry and community needs.
6.3
Long-term interventions
The roadmap to improve human capital in Cambodia needs to focus on a balance of
long-term interventions mixed with a set of short-term interventions.
In the past two decades the importance of intellectual capital has grown as a result
of the worldwide shift towards more knowledge-based, rather than manufacturingbased, production. Lynn (2004) claimed that there has been a metamorphosis from a
resource and manufacturing based economy to one in which knowledge and services
are key drivers of economic growth. Much of the current knowledge is created through
investments in human capital, with high levels of education and training inputs (Wilson
and Briscoe 2004). Coupled with this, of course, is evidence of the positive influence
of education, training and skills on performance of the individual and the national
economy. Furthermore, much of the literature indicates that there may be important
additional spill-over effects and externalities from higher human capital levels.
Thus, it is becoming increasingly important, in this changing world economy, to
focus on the long-term development of human capital, going beyond basic levels of
education towards high skill areas requiring many years of formal higher education
as well as constant training and upgrading of knowledge throughout one’s career.
Such a goal cannot be achieved in the short-term – nor can it be achieved without a
thorough, well thought out, comprehensive long-term plan for the development of a
nation’s education system.
6.3.1 Life-long learning and the changing concept of higher education
Policy makers in almost all countries agree on the importance of education and skills to
ensure future economic prosperity. Studies show that countries with the highest levels
of education and skills have on average higher levels of productivity and economic
growth. The issue of schooling and its impact on long-term economic growth has been
important to social science discourse since the 1960s, with the dominant hypothesis
being that education positively affects economic growth since it increases the level
of cognitive skills possessed by the labour force and, consequently, its marginal
productivity.
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Box 6.3
The nature of TVET and its contribution to building human capital
in the short- and long-term
According to the Task Force on Higher Education (2004):
“...since education is considered the key to effective development strategies, technical and
vocational education and training (TVET) must be the master key that can alleviate poverty, promote peace, conserve the environment, improve the quality of life for all and help
achieve sustainable development...”
In fact, there is a fresh and growing awareness among policy makers, development organisations
and the donor community of the critical role that TVET can play in a country’s national development
and human capital improvements.
The importance of TVET today is reflected in various ways. For instance, it is incorporated in poverty
reduction strategies or national development plans due to its natural orientation towards the world
of work, and its emphasis on curriculums for the acquisition of employable skills. TVET is well placed
to upgrade the skills of the workforce, creating avenues for wealth and a path out of poverty. TVET
institutions, in turn, can also deliver skill training at different levels of sophistication, to respond to
the different needs of learners from different socio-economic and academic backgrounds, and prepare them for gainful employment and sustainable livelihoods. Youth and the most vulnerable can
especially benefit from TVET.
Given its flexible nature, learning through TVET channels can be both a short-term and long-term
intervention for a country, to both fill in the skill gaps needed immediately by current workers and
to provide workers with avenues to upgrade their skills while providing and complementing alternatives to higher education and questions of equity associated with it. TVET is therefore a mean of
empowering individuals to take control of their lives, and should be considered complementary to
the general education system. Many developing countries are in fact starting to recognise that huge
numbers of young people are outside the formal school system, and informal learning methodologies and literacy programmes, are benefitting from TVET.
More specifically, the contributions of TVET to strengthening human capital make a series of shortto long-term contributions by:
• Providing individuals with skills not acquired in university;
• Empowering individuals, by expanding access and participation with an emphasis on underserved groups of both youth and adults;
• Limit early drop-outs and as a mean to improve employability or long-term employment;
• Complements issues of lifelong learning, by adapting the workforce to market needs;
• Brings different kinds of contributions, including becoming a vehicle for cooperation and integration as well as socio-economic development as it relates to improvements in infrastructure,
technological progress, energy, trade, tourism, agriculture and good governance;
• Strengthens shrinking or stagnant wage employment, especially in the industrial sector;
• Upgrades the skills of poorly educated, unskilled and unemployed youth; and
• Fills in gaps caused by geographical, gender and economic inequalities.
To complement the short- and long-term vision of TVET, strategic issues need to be addressed, including: improving the poor perception of TVET; improving instructor training; creating clearer linkages between vocational and general education, which gives a sense of perceived inferiority of vocational training; improve links between TVET and the labour market; better harmonisation of TVET
programmes and qualifications.
Furthermore, a series of strategic objectives – including the delivery of quality TVET, assuring the employability of trainees, improving the coherence and management of training provision, promoting
life-long learning and enhancing the status and attractiveness of TVET – should also be addressed.
In essence, the flexible nature of TVET, with horizontal and vertical short-term and long-term dimensions, suggests that the implementation of strategies to re-vitalise the sector and strongly contribute
to skill building and human capital development in a given country, can be successful if properly
integrated within national policy frameworks with clear implementation guidelines and policy roles
for the various actors.
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“There is a need
to create
a life-long
learning cycle
for Cambodia.”
However, the higher education sector today is facing a number of funding challenges,
which is a result of a tendency of fast growing demand on one side, and the inability
of the state to meet the required public resources for higher education institutions
(HEIs) on the other. In this context, HEIs are facing an increasing need to secure funds
from a variety of different sources, and the international tendency seems to show
that the main vehicle to fill this gap is to shift costs over to students and families. If
countries are to substantially increase and improve their human capital stock, however,
continued government support (both financially and in policy decisions) for HEIs will
be essential.
6.3.2 Long-term view
There is a need to create a life-long learning cycle for Cambodia. The components
needed include a long-term vision, the development of industry-specific strategies,
and the development of systems whereby the country is able to cope with the impact
of the world economy and its crises.
Hence, the long-term view requires a budget, quality assurance, a long gestation
period (10 years), raising enrolment ratios, decreasing drop-outs, and reducing
existing gaps. International experience shows that there are five relevant issues for
these challenges:
1. Access and equity: This includes promoting the expansion and outreach of
institutions, addressing ways to include a multitude of students from a variety
of backgrounds, increasing enrolments and participation rates, and increasing
the number and types of institutions. The major forces driving this have been:
the expansion of primary and secondary education, creating a wider demand
for tertiary education; greater demand from an increasingly service-oriented
labour market coupled with a process of urbanisation to meet the demands
of the modern world; and increased incentives from governments to provide
students with equitable access to higher education.
2. Financing: Reforming the fiscal governance of higher education institutions
is a crucial component to secure enough funding through diversified sources,
and to allow students from poorer backgrounds better access to HEIs. Meeting
tuition fees and various expenses is in fact a major issue for many students, and
this issue has to be carefully addressed, especially as costs in higher education
are rising faster than unit costs in the overall economy – a tendency accelerated
by the rapidly increasing costs of technology.
3. Accountability: This implies creating better internal structures to provide
improved management and meeting demands for greater accountability from
institutions and faculty for students, employers, and taxpayers. This is caused
by a general perception that HEIs are insufficiently accountable to students and
governments.
4. Research and relevance: Improving HEIs capability to do research, by
enhancing their ability and presence in a world where science, technology
and international competition are progressively playing important roles in
the future economic prospects of a country. This means, among other things,
meeting the international challenge and mainstreaming the idea of life-long
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learning to adapt the future workforce to the solutions and orientations of a
more globalised market.
5. Quality and efficiency: This will involve reviewing and reforming curricula and
reorganising courses and study programmes to be more in line with the modern
working world. Focusing on this will be crucial given problems of control over
the quality or behaviour of teaching staff or inappropriate curricula which can
be unrelated to the needs of specific economies. Furthermore, it is important to
upgrade the quality of facilities, libraries, computers, and other equipment.
Thus, in order to make this work for Cambodia, the country requires an institutional
framework or elements for a comprehensive human capital vision.
Success or failure for Cambodia, following its 2004 accession to the WTO, will depend
on how well the country is able to tackle issues that affect its international trade
competitiveness and mitigate the negative effects of accession, especially for the poor.
Many issues are related to governance, issues that have so far eroded the country’s
competitiveness (i.e. corruption), and impeded job creation and efforts in poverty
reduction. Joining the WTO therefore implies reinforcing national production and
competitiveness, and sub-regional trade, while recognising the need to accelerate
legal and judicial framework reform so that the private sector can operate under more
certain market rules.
6.4 Cambodian Human Capital Development Roadmap
Cambodia should be given enormous credit that despite a recent history of internecine
conflict and political instability, these events, which might have pushed other countries
into a prolonged state of institutional decay and economic ruin, have not inhibited
its ability to consolidate a new political system of electoral democracy, to usher in a
period of record growth and sharply raise its human development performance.
While a low economic base is certainly part of the explanation, as is a one-off peace
dividend with the demise of the Khmer Rouge, this is not the whole story. Such factors
by themselves do not explain why some countries can embark on massive structural
change and create new industrial and service sector capabilities while others merely
go back to historical levels of agricultural growth, and thus do not give Cambodia
enough credit.
Cambodia has not only recovered from social conflict and mass murder, it has
undertaken wholesale institutional transformation, established completely new
sources of growth and employment (such as bringing enormous numbers of female
workers into the labour force), decisively moved away from central planning to an
open market economic system, reached out to international and inter-regional
organisations and agencies (such as ASEAN), and initiated a formal and organised
system of regular dialogue with the private sector. It has also had to battle with the
fallout from two massive economic shocks, the first in the form of the Asian Economic
Crisis in its own neighbourhood, and the second on a global scale triggered by the US
mortgage crisis.
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Box 6.4
To upgrade human capital in Cambodia,
a long-term strategy with short-term components is needed
Government coordination across various ministries:
Need to identify good governance practices for coordination and provide an institutional mapping of the allocation of roles and responsibilities in design, regulation and implementation.
Identification of key coordination mechanisms and capacity gaps will be essential, along with
the assessment of pros and cons of governance mechanisms used by the Government to bridge
gaps.
Coordination with the Ministry of Economy and Finance
to sustain spending for the education sector:
In order to sustain a process that can upgrade higher education systems, there is a pressing need
for the country to plan ahead for the next 10 years, and provide a financial commitment that can
sustain this process. This implies a strong commitment from the Ministry of Economy and Finance
in planning and budgeting for this end. Yet whatever education sector officials can do, the context
in which they are working is often beyond their control. In an era of intensified thirst for knowledge, full financing of higher education is expensive everywhere. There are many competing,
urgent Government expenditures, and overall fiscally related budget cuts mean stark choices.
Coordination between Cambodia and other institutions across Asia
(i.e. part of a wider ASEAN market):
Many countries in Asia and Pacific region are faced with a growing challenge to respond to the
skills needed from their workforce in an increasingly technologically competitive and globalised
world. National skills strategies must correspond and support economic growth and employment, and should be responsive to the needs of the disadvantaged. Cambodia should also focus
on integrating with the ASEAN Movement of Skilled Workers by 2015, ensuring the harmonisation of competency-based standards (MoLVT and ILO 2010).
It is also to Cambodia’s credit that it joined ASEAN not during the best of times but
during some of the worst faced by the organisation. It is equally to its credit that the
partial collapse of its principal export industry and industrial employer did not tempt
the country into a path of protectionism or policy paralysis. Instead, Cambodia has
increased its engagement with the private sector and has invited aid organisations
to work with it in many complex areas of economic policy from aid effectiveness to
international competitiveness, investment climate, labour markets and human capital
needs.
In fact, even during times of great economic stress Cambodia has stuck to its
Rectangular Strategy, emphasising the inherent inter-linkages between economic
growth, governance and social welfare. Its major policy agency, the Supreme National
Economic Council (SNEC), is constantly engaged with the question of a future structure
of production and economic growth, the physical and human capital resources
needed to bring this about, and the options in international assistance and bilateral
credit which can help boost domestic savings to GDP ratios. The policy agenda has not
descended to pulls and counter-pulls from international donors and civil society with
an overworked civil service alternating between one donor mission and another.12
It is important to note that while future growth is unlikely to be a repeat of the past for
reasons examined closely in the World Bank’s country growth diagnostic report and
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mentioned in the present paper, the prospects are not as dreary as might appear from
a dry recitation of global economic data, competitiveness surveys or the quality of FDI
and the footloose nature of the international garment industry.
There are many reasons for optimism with respect to the economic future of Cambodia.
As argued above it has, unlike many low-income developing countries, crafted a
stable political system with relatively open entry and exit of private businesses into
the market. It has successfully navigated the disruption brought about by the 1997-98
Asian Economic Crisis and negotiated entry into ASEAN at the time of its most critical
challenge. It has organised a significant fiscal stimulus, while still maintaining fiscal
probity, to ease the social impact of the recent economic crisis. It has earnestly sought
a dialogue with the domestic and international private sector in search of the best way
to diversify the economy and improve international competitiveness.
“The RGC has
placed a
high priority
on industrial
diversification
as part of the
essential
learning from
the recent
economic
shock.”
In addition (see appendix Box A.7) it is increasingly being integrated into the
regional Asian economy by shifting patterns of trade and investment, and as a tourist
destination. It has kept governance reform high on the policy agenda, including the
eradication of corruption. Moreover, the spectacular success of many of the economies
in the neighbourhood – including Viet Nam, China, India, and now Indonesia –
provide a large menu of good practices which allow Cambodia to leapfrog over many
other developing economies in search of a more diversified, robust, technologically
advanced, and knowledge-oriented economy.
6.4.1 Economic diversification, competitive advantage and human capital
The RGC has placed a high priority on industrial diversification as part of the essential
learning from the recent economic shock. If such a programme is to be implemented,
it will not only require investment in physical capital, but also much investment in
human capital formation. Given that in many fields of enterprise, human capital
development involves a longer gestation period than physical capital, the government
faces a dilemma in terms of how to design a future industrial diversification plan;
whether it should first identify industries for future expansion based on existing and
projected human capital stock, or chose industrial sectors based on global economic
and technological trends or changing patterns of regional integration and then find
the most effective ways of meeting human capital requirements of the new set of
industries.
A further dilemma is whether to fashion an industrial policy at all or to focus instead on
improving the investment climate and reducing the cost of doing business to become
a favoured destination for future FDI and complementary domestic investment. As
argued in the first chapter of this report, the role of the state in economic management
as well the degree to which it can successfully determine its own development path
is still a matter of great debate. The fact is that almost every developed country as
well as successful Asian economies have all used state direction of the economy to set
out development visions and targeted particular industries for special economic and
fiscal support. The Korean example particularly illustrates the spectacular results of the
state and the private sector working together to create new patterns of comparative
advantage quite different from what had been inherited.
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“Whatever
path is chosen,
investment in
human capital
in different
forms is likely
to remain
the order
of the day.”
In a very real sense, however, the development debate has moved on from the large
state/small state argument or from the desirability of picking industrial winners or
promoting inward FDI through an improvement of the investment climate. Over the
last 15 years, a new development consensus has taken root, a consensus based on the
critical importance of the knowledge economy in which investment in human capital
is likely to yield higher growth returns than that in physical capital. The transmission
channel for this result is the association between human capital and productivity,
both through the ability to move up the value chain in a given industry as well as
through the expansion of the supply of new knowledge products into the market.
While water-tight econometric evidence of the factors causing a given pattern and
rate of growth is still absent, there is an overall agreement that human capital and
knowledge is going to become increasingly more important in the future. Moreover,
most developed countries and many developing ones have already embarked on a
sustained programme of technological upgrading and higher education reform, often
in partnership with business itself. This is itself raising the stakes for those economies
who fail to follow in this technological and innovation capacity building. One cannot
afford to wait for a completely convincing econometric result on the impact of
educational investment before preparing for this new economic world.
An interesting question in this regard is whether the advent of the knowledge
economy is beginning to change the meaning of industrial diversification itself. As
the Task Force on Higher Education and Society (2000) and many other similar studies
point out, much depends on what one means by ‘picking winners’ in the choice of
industrial policy. This can be done in differing degrees of specificity; from garments to
textiles, from domestic tourism compared to tourism generally, from the automobile
industry to vehicles, rice milling instead of rice production, processing food against
growing food crops. It can also more interestingly be specified along technological
or design lines in the ways in which we increasingly speak of the information industry
or creative industries (such as films or even education) or even along the lines of a
defining character trait as in the case of the hospitality industry. The variety of options
is brought out in growth and industry literature with the argument that Cambodia
should focus first on diversifying its areas of broad comparative advantage before it
endeavours to promote new industries such as information technology or electronics
through state support.
The advent of the knowledge economy opens up the possibility of technological
leapfrogging while Cambodia’s own human capital deficits encourage focus on what
is immediately practical, such as retraining of retrenched workers, promoting labour
migration, and importing new technologies through imported equipment and FDI.
Whatever path is chosen, investment in human capital in different forms is likely to
remain the order of the day. Moreover, the priority on human capital investment is likely
as the Cambodian economy becomes more integrated into regional Asian economies
and the larger world market.
6.4.2 Towards a Cambodian Human Capital Development Roadmap
An important conclusion of this study is the need for a comprehensive Human Capital
Development Roadmap to guide the post-crisis economic development of Cambodia.
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Human Capital Implications of Future Economic Growth in Cambodia
Moreover, such a Roadmap needs to be grounded not in the immediate training and
vocational training needs of the Cambodian recovery, but in alternative scenarios
focusing on the possibilities of industrial diversification in Cambodia as well as a
more general, all-encompassing effort to build the foundations of a future knowledge
economy. This does not mean that Cambodia must make a major investment effort
in R&D or in the immediate development of innovation networks with the private
sector. It does, however, mean a focus on all the elements that go into making a robust
knowledge economy framework: from higher education within a life-long learning
system and coordination of relevant knowledge institutions, to entering into lasting
partnerships with international knowledge institutions and resource pools.
Specific recommendations and needed actions are captured in a policy matrix appended
to this report and described in some detail above. They include both a set of long-term
measures creating the institutional architecture of a knowledge economy as well as
a set of short-term crisis management and employment recovery measures, some of
which are already being undertaken by the RGC. In addition, they include opportunities
for building international knowledge partnerships. This is probably the best that can
be done in terms of the broad direction of the Human Capital Development Roadmap,
given the lack of a clear industrial strategy and the country’s fast evolving economic
integration into ASEAN. Nevertheless, it does set the stage for thinking about human
capital needs, investment and institutional structures as Cambodia searches for the
best path to economic recovery in a more uncertain globalising world.
An important feature of this report is the emphasis on identifying and correcting the
human capital deficits in the Government and relevant civil society sectors. The main
reason for this is the greatly increased role of the state in laying the foundations of the
knowledge economy: tertiary education and on-the-job training, supporting R&R and
innovation networks, expanding information technology coverage and information
sharing networks, identifying external knowledge partners and facilitating knowledge
hubs and partnerships, and promoting public dialogue on the quality and access
of public services such as education and health. It is also important to consider
government/state human capital deficits because international experience suggests
that the size of the state will most likely continue to expand in Cambodia. This provides
early warning of impending problems and the possibility of proactive solutions using
E-governance, new forms of public communication and dialogue, and knowledge
sharing through public policy research and think tanks.
Another major dimension of the Human Capital Development Roadmap is the
integration of human development into human capital planning and investment.
Emphasis on human development is a significant way to improve the ‘quality of growth’
in the sense of extending the benefits of growth to a large group of regions and
households. As argued in Chapter 4, promotion of human development is compatible
with the needs of the knowledge economy since innovation, as distinct from formal
learning, is an important product of knowledge sharing through near universal access
to frontier technologies and knowledge products.
Another important contribution to raising human development indicators is to
generate incentives for further learning and the acquisition of new skills both because
of the establishment of universal basic skills and health thresholds as well as reducing
UNDP Discussion Paper No. 8
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Human Capital Implications of Future Economic Growth in Cambodia
“In their
search for
a new
economic
diversification
map, human
capital and
human
development
may well
be the
next frontier.”
112
vulnerability to absolute poverty. That in turn widens household and individual choices
in job searches and mobility, in shortening the waiting period for appropriate jobs in
line with acquired skill sets and in lowering school drop-outs.
Finally, this report argues that there is much to be optimistic about in Cambodia’s future
economic development. It has navigated three decades of extraordinary hardship and
uncertainty. It could have easily entered into the growing catalogue of low-income
countries that have become trapped in the depressing cycle of social conflict, state
failure, stagnant structure of production, inward orientation, and political instability.
A Human Capital Development Roadmap needs to be acutely sensitive to the human
dimensions of policy-making and the massive erosion of human resources which have
taken place since the beginning of the Khmer Rouge regime to the beginning of the
last decade. In their search for a new economic diversification map, human capital and
human development may well be the next frontier.
UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
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122
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Specific interventions
Core of the
Rectangular Strategy
Public Administration Reform: Public Administration is one strategic instrument of implementation for the Rectangular Strategy. Since
2000, the Council for Administrative Reform (CAR) has implemented a series of National Programmes for Administrative Reform to systematically and gradually transform the Administration and the Civil Service into effective providers of public services and trusted development
partners. The Royal Government intends to continue to vigorously pursue the implementation of the National Programme for Administrative
Reform to transform the Administration and the Civil Service into effective providers of public services and trusted development partners.
Legal and Judicial Reform: The Royal Government is committed to accelerating the Legal and Judicial Reform process. The Council for Legal
and Judicial Reform, established in June 2002, has a mission to “initiate and encourage the process and to follow up the implementation
of legal and judicial reform policy and programmes in accordance with the objectives of the Supreme Council of State reforms”. The “Legal
and Judicial Reform Strategy” has seven strategic objectives which are as follows: Improvement of the protection of fundamental rights and
freedoms; Modernisation of the legislative framework; Provision of better access to legal and judicial information; Enhancement of the quality of legal processes and related services; Strengthening of judicial services; Introduction of alternative dispute resolution mechanisms; and
Strengthening of Legal and Judicial sector institutions to fulfil their mandates
Fighting Corruption: The RGC adopted a holistic approach to fighting corruption that recognises the limitations of the existing legislative
framework as well as the existing capacities of its institutions, in particular the legal and judicial system. This approach recognises that fighting corruption requires capacity to effectively manage and enforce the implementation of any anti-corruption laws that are put in place.
Good Governance: The core of the Rectangular Strategy needs, above all, equitable and fair public participation in all matters through
democratic and peaceful means to ensure that the free will and informed choices of the majority are adopted and implemented, while at the
same time protecting the rights and welfare of the minority.
The “Rectangular Strategy” synthesised the key elements of the “Cambodia Millennium Development Goals”, the “Socio-Economic Development Plan 2001-2005” (SEDP II), the “Cambodia National Poverty Reduction Strategy 2003-2005” (NPRS), and various important policies, strategies, plans and other reform programmes, all of which had been formulated through broad consultations with all national and international
stakeholders. The main aim of the “Rectangular Strategy for Growth, Employment, Equity, and Efficiency” was to promote economic growth,
generate employment for Cambodian workers, ensure equity and social justice, and enhance the efficiency of the public sector through the
implementation of the “Governance Action Plan” and in-depth reforms that are coordinated and consistent across all levels and sectors.
Specific Objective
of the Rectangular
Strategy
ROYAL GOVERNMENT OF CAMBODIA RECTANGULAR STRATEGY (November 2009)
NATIONAL STRATEGIC DEVELOPMENT PLAN UPDATE 2009-2013
Annex 1: Royal Government of Cambodia Rectangular Strategy
(National Strategic Development Plan Update 2009-2013)
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1. Enhancement of
Agricultural Sector
Improving agricultural productivity and diversification: The “Agriculture Sector Strategic Development Plan: 2006-2010” has identified
the following seven strategic objectives for the agriculture, fisheries and forestry sectors:
• Food security, productivity, and diversification.
• Improve and strengthen agricultural research and extension systems.
• Market access for agricultural products.
• Institutional and legislative development framework.
• Land reform - land market development and pro-poor land access.
• Fisheries reform - sustainable access.
• Forestry reform - promote sustainable conservation and management of forests, ensure better management of natural protected areas.
To achieve the seven strategic objectives, the Ministry of Agriculture, Forestry and Fisheries has organised its activities in the following five
programme areas:
Programme I: Improving productivity and diversifying agriculture sectors.
Programme II: Promote market access of agriculture products.
Programme III: Strengthen institution, legal framework and human resources development.
Programme IV: Management of sustainable fishery resources.
Programme V: Management of sustainable forestry resources.
Reform of the Royal Cambodian Armed Forces: The reform of the Royal Cambodian Armed Forces (RCAF) as one angle of the Royal Government’s Rectangular Strategy demands an effective response from the RCAF in its reform to absolutely ensure peace, stability, security,
sovereignty, territorial integrity and the nation’s development. Based on the ‘Defence White Paper’ as a compass for the RCAF to successfully
implement the RGC defence policy, the reform and further capacity enhancement of the armed forces are proceeding according to plan
through demobilisation and establishment of more effective armed forces.
Decentralization and De-concentration Reform Programme: to achieve broad-based and sustainable development and strengthen vibrant local economic foundations so that every citizen has an equal opportunity to participate in local development, effective environment
and natural resource management, and delivery of quality public services to meet the needs of citizens and poverty reduction by focusing on
vulnerable groups, indigenous minorities, women and children.
ROYAL GOVERNMENT OF CAMBODIA RECTANGULAR STRATEGY (November 2009)
NATIONAL STRATEGIC DEVELOPMENT PLAN UPDATE 2009-2013
Human Capital Implications of Future Economic Growth in Cambodia
2.Further
rehabilitation and
construction of
physical
infrastructure
Further rehabilitation and construction of transport infrastructure: Significant progress has been made in rehabilitating and construction of physical infrastructure of the national roads network, ports and main airports to put in place a transportation network connecting
all parts of the country, as well as neighbouring countries. RGC has also given a high priority to ensuring that the transportation network is
properly maintained and has encouraged and promoted the participation of the private sector in the operations and maintenance of the
transportation network.
Forestry reform: The Reforestation/tree plantings, community’s forestry establishment, forest boundary demarcation, wildlife and forest research and conservation and the National Forest Programme development were actively carried out as planned and Forestry Administration
on behalf of RGC has set up and proceeded with the business of Cambodian Forest Carbon Credit through the implementation of a sample
Carbon Credit project for the forestry communities in Banteay Meancheay in order to reduce the poverty of populations in rural areas and to
reduce climate change and global warming.
Private sector employment generation: RGC has recognised and accorded a critical place for the private sector as the main engine for investment and growth in the country. RGC’s role is that of a fosterer, promoter, enabler, facilitator and regulator.
Fisheries reform: The new Fisheries Law was promulgated in May 2006; the fisheries sector has since undergone major reforms and now
has a more poverty-focused approach. Plans have been developed based on Cambodian Code of Conduct for Responsible Fishery. Since the
release of the fishing lots for community use, 468 Community Fisheries have been established (433 inland, 35 coastal), of which 173 were
formally legally registered in October 2008. In addition, 235 Community Fish Refuges (CFR) have also been established mostly in the remote
areas far away from important water bodies.
Land reform and clearing of mines: The priority is an emphasis on strengthening security of land tenure for state land, private land, and
land of indigenous people’s communities through systematic and sporadic land registration in order to issue land titles to general citizens,
institutions, and indigenous communities that are eligible to tenure rights. To strengthen land management, the required policy and legal
and regulatory framework for effective implementation of the Land Law has been developed and approved. The work so far has included: (a)
Sub-decree on State Land Management, (b) Sub-decree on Procedures of the Registration of Indigenous Community Land, (c) Sub-decree
on Procedures of Commune Land Use Planning, (d) Sub-decree on the Management and Use of Co-owned Buildings, (e) Circular on Illegal
Occupancy of State Land, (f ) Joint Prakas on State Land Identification, Classification and Mapping, (g) Joint Prakas on Mechanism for the
Provision of Agricultural Extension Services to Farmers Using Social Land Concession, (h) Joint Guidelines on Strengthening of the Cadastral
Commission Performance at all levels, (i) Draft Law on Providing Ownership Right of Private Unit in Co-owned Building to Foreigner (this is
under request for approval from the legislative institution).
ROYAL GOVERNMENT OF CAMBODIA RECTANGULAR STRATEGY (November 2009)
NATIONAL STRATEGIC DEVELOPMENT PLAN UPDATE 2009-2013
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3.Private sector
development and
employment
generation
Promoting SMEs: The planned work ahead will focus on three main aspects, viz., (1) legal framework and adjustment – limitation of procedures of inspection and product justification for import and export without sacrificing essential quality aspects, preparation and adoption
of a sub-decree on business facilitation through risk management, and widening registration through Internet; (2) financing, creation of a
financial leasing company, company classification by credit points, and strengthening governance and financial reporting; and, (3) supportive
actions for SMEs – creation of a new business development service, prevention of all kinds of smuggling, subsidies for SMEs for export, and
adding SMEs into a global value chain. Adoption and acceleration of the ‘One Village, One Product’ movement is among many measures to
be pursued.
Creation of jobs, and ensuring improved working conditions: The Ministry of Labour and Vocational Training (MoLVT) provides employment placement services to assist job-seekers in finding employment in private sector businesses in the country and overseas. To ensure
improved working conditions, the Ministry has continued its focus on strengthening the enforcement of the Labour Laws and regulations,
disseminating information about these laws, conducting inspections of working conditions, hygiene and occupational safety, child labour
and foreign employees at business establishments across the country.
Strengthening private sector and attracting investment: The Government-Private Sector Forum, that meets every six months, as well as
the work of the Steering Committee and various sub-committees have provided an important venue for meaningful cooperation and understanding between the RGC and the private sector. An additional working group for improving employer-employee relations has been set up.
To reduce barriers to seeking approval from line ministries and agencies, the Royal Government has created a ‘Single Window’ mechanism
through which investors can receive a complete set of approvals, all paper requirements to seek approval of their investment applications.
The Cambodia Investment Board/Council for the Development of Cambodia has also established an ‘Investor Aftercare’ mechanism and an
‘Investor Tracing System’ to deal with challenges faced by investors and to monitor the progress in the implantation of the approved investment projects. The Ministry of Commerce has been working on streamlining the procedures for new business registration, providing market
information, organising product associations, implementing ‘better factories’ programme, trade facilitation and promotion, and enforcement
of intellectual property laws
Development of ICT: Information and communication technology includes telephones and telecommunications, and mass media. With
increasing competition and largely led by private operators, Cambodia has leaped ahead in the use of mobile phones.
Development of the energy sector: To guide the development of the energy sector, an Energy Sector Development Plan, 2005-2024 has
been prepared. A Rural Electrification Master Plan focusing on the use of renewable energy has also been prepared and is being implemented. Offshore oil and gas fields are a common asset of all Cambodians, now and in the future.
Management of water resources and irrigation: The Ministry of Water Resources and Meteorology (MoWRAM) has made significant progress during 2006-2008 in rehabilitating and constructing irrigation infrastructure to expand capacity of the irrigation system and to provide
protection from natural disasters (floods and drought) that are becoming more unpredictable because of climate change. The Law on Water
Resources Management was approved and adopted in June 2007.
ROYAL GOVERNMENT OF CAMBODIA RECTANGULAR STRATEGY (November 2009)
NATIONAL STRATEGIC DEVELOPMENT PLAN UPDATE 2009-2013
Human Capital Implications of Future Economic Growth in Cambodia
Specific objective
•
•
•
Decrease the
number of highly
vulnerable people
Reduce exposure
of the most vulnerable people to
shocks from the
global economy
Ensure the inclusion of highly vulnerable individuals
into the human
capital development plan for
Cambodia
Ensure the ability
of highly vulnerable people to
maintain their
livelihoods
Expected results
Crisis response Poverty alleviation •
and recovery
Immediate interventions
Policy
recommendations
•
•
•
•
•
Percentage of
people below the
absolute poverty
line
Number of people
formally employed
Number of people
receiving government aid and
participating in
government support programmes
Rate of industrial
development
Rate of growth
and FDI
Verifiable indicators
•
•
•
•
Risks
Government re- •
ports and figures
Donor reports
Growth diagnos•
tic reports
Unemployment
and household
income and
expenditure
•
surveys
•
Sources and
means of verification
Failure to
homogenously
disperse government support
Failure to identify the most vulnerable populations
Private sector
disengagement
Lack of longterm vision for
the inclusion of
highly vulnerable people
in Cambodian
development
Time
Various ministries Next 6
in the Governmonths
ment of Cambodia with support
from development partners
Lead
Annex 2: Cambodia in the Human Capital Development Roadmap and possible interventions
Human Capital Implications of Future Economic Growth in Cambodia
UNDP Discussion Paper No. 8
TITLE
127
Policy
recommendations
128
Increase social
safety nets and
ensure safety nets
have adequate
funding
Specific objective
UNDP Discussion Paper No. 8
•
•
•
•
Percentage increase in Government funding for
social safety nets
and social support
services
Number of beneficiaries receiving
funding through
social support
services in times
of crisis
Increased number
of programmes
to sustain social
safety net policies
Verifiable indicators
Sustained income •
despite economic
shocks or fragility
of industries
Sustained income
despite change
•
in orientation of
industrial sector
Reduce vulnerability of unemployed
Increase capacity
of the Government
•
to deliver social
support services
with sustained
funding
Expected results
•
•
•
•
•
•
•
Statistical
reports on the
receipt of social
support systems
National development plans
Monitoring
reports
Surveys of recipients
Risks
Sources and
means of verification
•
Unequal distribution of social •
support services •
No change in
provision of
social safety net
systems and
programmes
Decreased or
lack of support
from development partners
Lead
MEF
MoP
Development partners
2012
Time
Human Capital Implications of Future Economic Growth in Cambodia
Policy
recommendations
•
•
•
•
Dealing with internal migration
Greater support
systems for individuals migrating
to new areas
Better cooperation between the
Government and
private sector
for generating
employment for
migrants
Providing educational opportunities for migrants
Increasing the flexibility and mobility
of workers to move
from one sector to
another based on
skills and ability
Expected results
Specific objective
•
•
•
•
•
•
•
•
•
•
•
Government
reports
Employment
reports
Census data
Migrant surveys
Monitoring
reports
Development
partner reports
•
•
Figures on migration, employment,
and economic
growth
Rate of FDI inflows
and withdrawals
Number of
migrant-related
Government support programmes
Figures on the skill
and education
levels of migrant
workers
Risks
Sources and
means of verification
Verifiable indicators
•
Unwillingness
•
or disinterest
•
of migrants to
participate in
support programmes
Inability to
systematically
access migrant
workers for
training and
skill-building
Lack of cooperation from private
sector
Lead
MoLVT
1 year
Private sector
Development partners
Time
Human Capital Implications of Future Economic Growth in Cambodia
UNDP Discussion Paper No. 8
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129
Policy
recommendations
130
UNDP Discussion Paper No. 8
•
•
•
•
Ensure the
sustained inflow
of FDI through a
friendly investment environment
Ensure a strong
production base
across industries
Sustained dialogue
between the private sector and the
Government
Maintain the
overall growth of
the Cambodian
economy
Address skill gaps
and labour market
information
Expected results
Promoting private •
sector development and cooperation
Specific objective
•
•
•
•
•
•
•
•
•
•
•
Employment,
growth, and
industry reports
Industry surveys
Development
partner reports
Monitoring and
evaluation
•
•
Amount of FDI
inflows into Cambodia
Employment,
industrial diversification, and
growth figures
Rate of overall
investment in
the Cambodian
economy
Number of workers matching job
skills and competency needs
Risks
Sources and
means of verification
Verifiable indicators
Development
in select sectors without
economy-wide
diversification
Lack of dialogue
between Government and
private sector
Continued external shocks
Lack of skilled
labour
Lack of interest
from foreign
companies in
investing in
Cambodia
•
•
Lead
Various
1 year
government
ministries
Private sector
Time
Human Capital Implications of Future Economic Growth in Cambodia
•
•
Targeting rural
•
and poor individuals and communities most affected •
by economic
crises
Addressing
unemployment
Decreasing unemployment among
rural poor
Enhance capability
of key industries
to respond to
external economic
shocks
Provide alternative
employment possibilities for rural
and poor
Incorporation of
this target into the
national industrial diversification
strategy
Expected results
Specific objective
Policy
recommendations
•
•
•
•
Number of unand under-employment among
rural and poor
Increased provision of nontraditional work
avenues
Number of groups
and individuals
having received
formal employment training
(soft and hard
skills) to sustain
employability
Establishment of
a roadmap for this
target in national
industrial diversification strategy
Verifiable indicators
•
•
•
•
•
Risks
•
Employment
statistics among
rural and poor
Surveys
Monitoring
reports of development partners •
and private
sector
Training reports
Reviewing
changes to national industrial •
diversification
strategy
Sources and
means of verification
•
Interventions
focus more on
rural or poor
rather than allencompassing
strategies
•
Lack of coordination between
government and
private sector
employment
providers
Sustained fragility of Cambodian industries to
global economic
shocks
Lead
MoEYS with
2012
support
from private
industry and
development
partners
Training
providers
Time
Human Capital Implications of Future Economic Growth in Cambodia
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131
Policy
recommendations
132
UNDP Discussion Paper No. 8
•
•
•
Increased and
sustained employment
Increasing quality
of employment
and reducing under-employment
Changing mindset
of employees to
encourage motivation and career
prospects
Invest in ways to
increase employability of laid-off
workers
Address the needs
for industrial diversification strategies and long-term
Human Capital
Development
Roadmap
Expected results
Investments in
•
infrastructure that
are employment
intensive and
•
encourage local
development
Specific objective
•
•
•
•
•
•
•
•
•
•
•
•
•
National unemployment and
under-employment statistics
Employee surveys
Employer surveys
Monitoring reports by various
development
partners
Training reports
•
•
Percentage of
people in sustained employment
Percentage of
people underemployed
Percentage of
employment
satisfaction for
individuals
Rate of promotion and/or salary
increases
Rate of change in
nationally un- and
under-employed
individuals
Number of
soft-skill trainings provided by
employers
Risks
Sources and
means of verification
Verifiable indicators
Unemployment •
not decreasing
•
Increasing
•
under-employment
Unemployment
decreases only
in major urban
centres and is
not homogenous throughout the country
Lack of sustained economic
conditions
encouraging
employability
and job creation
Lead
MoEYS
Private sector
Development partners
End of
2012 for
implementation of
employment
sustaining
activities
End of
2011 for
decreasing unemployment
Time
Human Capital Implications of Future Economic Growth in Cambodia
Policy
recommendations
•
•
•
•
•
Improve labour
market information
Individuals employed in sectors
matching their
skills
Improve systems
for job seekers
Less un- and under-employment
Greater ability to
address changes
in industries and
economies
Better understanding of the
country’s industrial diversification
efforts leading to
more focused skills
development
Expected results
Specific objective
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Employment
figures
Industrial diversification figures
Government
reports
Employee and
employer surveys
•
•
Rate of un- and
under-employment
Number of individuals recruited
based on education and skill-base
Number of employers having
adequately skilled
workers
Percentage of
individuals who
obtain new skills
based on market
information
Risks
Sources and
means of verification
Verifiable indicators
Unemployment
not decreasing
Increasing
under-employment
Unemployment
decreases only
in major urban
centres and is
not homogenous throughout the country
Lack of sustained economic
conditions
encouraging
employability
and job creation
Unequal national coverage
or inability to
reach all areas or
regions
Lack of basic
education on
which to increase training
Lack of cooperation from private
sector
Lack of direction
on skills needed
Time
1 year
Lead
MoLVT
with
private sector
cooperation
Human Capital Implications of Future Economic Growth in Cambodia
UNDP Discussion Paper No. 8
TITLE
133
134
UNDP Discussion Paper No. 8
Improve national
coverage
Expand the programme basis, extending to primary
school children
Expand the equity
base of beneficiaries
Reallocate public
finances in favour
of priority industries
Strengthen and
•
expand the Scholarship for the
•
Poor Programme
(lower secondary
scholarships and
pilot of primary
•
scholarships)
•
•
Reducing the
number of people
out of school by
improving access
to school and
retention rates
and increasing
financial incentives
for families with
children in school
Double the number of beneficiaries
Increase in subsidies for continuing education
Stopping
school dropouts
Expected results
•
Specific objective
Policy
recommendations
•
•
•
•
•
•
•
•
Securing sufficient •
financial base
to sustain pro•
gramme
Number of
regions receiving
increased funding •
Number of beneficiaries receiving
funding
Number of
disbursements
spread between
beneficiaries by
type (ultra poor,
poor and middle
income)
Risks
•
Statistics of
beneficiaries
Surveys through
school manage- •
ment committees
Data collection
analysis through
consolidated
database
Calculating how •
much money
has been disbursed
Reports on statistical analysis
of student retention
•
Surveys
Sources and
means of verification
Number of subsi- •
dies distributed
Variation in retention and transition
rate
•
Number of
families receiving
subsidies
Number of benefi- •
ciaries
Verifiable indicators
Money not disbursed homogenously
Unfair distribution of funding
to beneficiaries
by type
MoEYS
MoEYS with support from various
develop-ment
partners
•
Money will not
be disbursed
homogenously
throughout the
country (rural
areas may be left
out)
Enabling learning environment does not
improve
Lead
Within 1
year
Within 1
year
Time
Human Capital Implications of Future Economic Growth in Cambodia
Policy
recommendations
•
Number of students graduating
with higher levels
of education
Percentage transition and retention
rates
Percentage of
younger working
population with
higher levels of
education
Verifiable indicators
Decrease in drop- •
out rates
Increase in overall
education rates
Increase in second- •
ary and higher
education graduation rates
•
Expected results
Increase minimum •
school leaving age
•
Specific objective
•
•
•
•
•
Risks
Database statis- •
tics
Major reports on
education (i.e.
MDG report)
•
Data from MoEYS
Employer surveys
Monitoring
reports on
education (from
various development partners)
Sources and
means of verification
MoEYS with supHigher levels
port from develof education
opment partners
do not match
quality and skills
improvement
Unequal distribution of types
of graduates
throughout
provinces (gender and income)
Lead
2012
Time
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UNDP Discussion Paper No. 8
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136
Specific objective
Create information system of
education industry and statistics
Policy
recommendations
Establish
system able to
pool data and
information
on relevant
education
and industry
statistics
UNDP Discussion Paper No. 8
•
•
•
•
Amount of
immediately
available statistics
for education
policy analysis
and development
purposes
Increasing the demand for statistical information for
evidence- based
decision-making,
policy formation
and monitoring
and evaluation
Verifiable indicators
•
Creation of
comprehensive
information
system compiling
all relevant and important education
data and statistics
•
Identification of
relevant performance indicators
Establishment of
system which is
able to fully map
education and
industry realities
System able
to predict and
comprehensively
and strategically
address issues and
challenges
Expected results
•
•
•
•
Risks
Major indicators •
are identified by
the government
in cooperation
with private
•
sector
Collection and
processing of
accurate data
Increased use,
availability, and
reliability of data
Developing and
increasing human resources
capable of
collecting and
analysing data
Sources and
means of verification
Un-sustained or
un-systematic
collection of
data and information
Unavailability of
human capital
possessing adequate skills for
collection and
analysis of data
•
•
•
•
•
Lead
NIS
MoP
MoEYS
MoLVT
Support from
development
partners
End of
2012 for
gathering of
data
End of
2011 for
creation
of system
Time
Human Capital Implications of Future Economic Growth in Cambodia
Policy
recommendations
•
•
•
Create system
able to analyse
and process information collected
from information
database for appropriate policy
formulation
More focused
policy interventions appropriate
to the development priorities of
Cambodia
Permanent
establishment of
channels serving
policy development needs
Increased capability of government
to provide direction to development partners
(ownership)
Expected results
Specific objective
•
•
•
Number of times
information
systems are used
by Government
and development
partners
Number of useful
and frequently
cited performance
indicators
Number of policy
recommendations
implemented
in line with the
country’s priorities based on data
collected
Verifiable indicators
•
•
•
•
Risks
•
Incorporation
of performance
indicators into
national development plans
Development
partners making •
use of newly
available data in
•
policy formulation and report
writing
Monitoring
reports
Evidence-based
impact of
development
programmes in
line with data
provided
Sources and
means of verification
Indicators chosen for database
are inadequate,
or do not completely reflect all
areas
Inadequate data
collection for
database
Lack of sustained support
from development partners to
build capacity
•
•
•
•
•
Lead
NIS
2012
MoP
MoEYS
MoLVT
Support from
development
partners
Time
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138
Specific objective
UNDP Discussion Paper No. 8
Improve conventional training to
increase soft and
hard skills
Filling the
skills gap
Identify and
expand training for key areas
which are in need
of increased skill
provision
Specific objective
Policy recommendations
Short-term interventions
Policy
recommendations
Individuals are
•
better equipped
with the necessary
soft and hard skills
to fulfill their job
requirements
•
Labour force more
able to address the
needs of the market and individual
employers
•
Developing a more
capable workforce
in a larger range of
sectors
•
•
•
•
Address the essen- •
tial work-related
skills while shifting
attention from basic skill training to •
individual learning
Training enables
learning, facilitates meaningful
personal development and helps
people realise their •
personal potential
•
•
•
•
Employer and
employee surveys
Monitoring and
evaluation
Reports on
recruitment
process
Employee and
employer surveys
Data on market
needs
Training reports
Monitoring and
evaluation
Sources and means
of verification
Sources and
means of verification
Percentage of
•
people adequately equipped with
skills required for •
their job
Percentage in•
crease in employers satisfied with
the skills provided
by their workers
Increased productivity of the
workforce
Percentage
increase in people
with appropriate
hard and soft skills
Percentage of
people who have
benefited from
education in
terms of career
and personal
development
Figures regarding
persistent skill
gaps in the market
Verifiable indicators
Verifiable indicators
•
Expected results
Expected results
•
•
•
•
Training is not
•
focused enough •
to address skill
•
gaps
Lack of information to properly
assess the needs
of the market
Time
Time
MoLVT
2015
MoEYS
In cooperation
with private
sector and
development
partners
2014
MoLVT
MoEYS
In cooperation
with private
sector and
development
partners
Lead
Lead
Lack of informa- •
tion to properly •
assess the needs •
of the market
Lack of skilled
teachers and
training personnel
Risks
Risks
Human Capital Implications of Future Economic Growth in Cambodia
Policy
recommendations
•
•
Ensuring adequate financial
backing for new
training and skill
building programmes
Sustained budget
commitment to
skill-building and
training
Capacity building
and continued
development
of training programmes for
workers
Expected results
Specific objective
•
•
Government
budget reports
Budget reports
from training
institutions
Public expenditure reviews
Sources and
means of verification
•
Percentage of
budget allo•
cated to schools,
training and skill
building, includ•
ing TVET
Figures for sustained budget
commitments and
impact on service
coverage and
quality
Verifiable indicators
•
•
Risks
MEF in cooperaSustained or
increased fund- tion with MoLVT
and MoEYS
ing does not
improve quality
of training provided
Funding is regionally concentrated and not
homogenous
Lead
2 to 3
years
Time
Human Capital Implications of Future Economic Growth in Cambodia
UNDP Discussion Paper No. 8
TITLE
139
140
Specific objective
UNDP Discussion Paper No. 8
Increasing flexibil- •
ity and modularisation of training •
Improve vocational training
•
•
•
Specific objective
Percentage
increase of
employed recent
graduates who
have undertaken
flexible and modularised training
Percent of TVET
programmes adjusted in line with
local or market
changes
Percentage increase in ownership, creativity
and determination of TVET participants
Verifiable indicators
Verifiable indicators
Providing individu- •
al learning paths
Greater decentralization and ability
of TVET to react to
the needs of different regions
•
Greater usage of
TVET to upgrade
skills
Greater responsiveness to
changes in market •
demands and skill
gaps
Encourage creativity, innovation, and
entrepreneurship
in the TVET framework
Expected results
Expected results
Policy recommendations
Short to long-term interventions
Policy
recommendations
•
•
•
•
•
Surveys of
recent TVET
graduates
Surveys of TVET
providers
Employer and
employee surveys
Reports from
MoEYS and
MoLVT on
changes in TVET
programmes
Monitoring
and evaluation
of TVET programmes
Sources and means
of verification
Sources and
means of verification
•
•
•
Lack of quality
despite changes
in training and
programming
Coordination
problems between types of
training provided and skills
demanded by
labour market
Coordination problems
between MoLVT
and MoEYS
Risks
Risks
•
•
MoLVT
MoEYS
Lead
Lead
End of
2014 but
sustained
over the
long run
(10 years
at least)
Time
Time
Human Capital Implications of Future Economic Growth in Cambodia
Policy
recommendations
Development of
skills and competencies of teachers and training
systems
Create forward
planning tools to
match skills with
jobs available
Increase partnerships with relevant
stakeholders for
vocational training
provisions
Population better
equipped with
appropriate skills
for labour market
demands
Increased motivation of TVET
participants
More targeted and
effective teaching
Increased TVET
participation
•
Increase systems
of quality assurance in TVET
Improve quality of •
TVET facilities and
equipment
•
•
•
•
•
Expected results
Specific objective
•
•
•
•
•
•
•
Percentage
•
increase of TVET
participants
•
Increased number
of physical supplies provided to
TVET institutions
Percentage of
•
individuals who
have gained
adequate skills for
employment
Surveys of TVET
participants
Government/
independent
providers’ budgets for TVET
supplies
Data on TVET
participation
(M&E)
Employer and
employee surveys
Research and
surveys conducted to verify
impact of TVET
Monitoring and
evaluation of
Government
and private sector partnerships
in TVET
Sources and
means of verification
•
Percentage of
individuals undertaking vocational
training that have •
acquired the necessary skills
Number of teach•
ers trained in vocational training
Number of workshops and trainings provided
Number of
partnerships with
non-governmental entities for the
provision of vocational training
Verifiable indicators
•
•
•
•
Increase in
budget doesn’t
lead to improved quality
of equipment
and training
Increased budget and better
facilities does
not increase
public interest in
TVET training
•
•
•
•
MoLVT
MoEYS
Support from
development
partners
Independent
TVET providers
2 years
but sustained
on the
long run
(10 years
at least)
2 to 3
years but
sustained
over the
long run
(10 years
at least)
MoLVT and MoEYS with support
from development partners
and in cooperation with the
private sector
•
Increasing
number of TVET
programmes
without increasing quality or
outreach
Ability of the private sector and
Government to
work together
Lack of interest
among individuals for participation in TVET
Time
Lead
Risks
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UNDP Discussion Paper No. 8
TITLE
141
Policy
recommendations
142
UNDP Discussion Paper No. 8
Expansion of
private and NGO
TVET providers
Opening up of
pathways between TVET and
higher education
Specific objective
•
•
•
•
•
Better coverage of
TVET institutions
Increase of skills
base in the labour
force
Increased diversity
of programmes
provided by TVET
•
•
•
•
Development of
tertiary TVET programmes
Increasing partnerships between
interested institu- •
tions
Greater coordination between TVET
and higher education in providing
the skills demanded in the market
Number of TVET
•
institutions run
by independent
providers
•
Percentage of
population un•
dertaking TVET
training provided
by independent
sponsors
Percentage increase in access to
TVET
•
•
•
MoLVT
Independent
TVET providers
Lack of coordination between
TVET providers
Lack of leadership by MoLVT
for the development of independent TVET
providers
•
Government
reports on TVET
institutions
Monitoring and
evaluation
Employer and
employee surveys
Lead
MoEYS and
Institutional
MoLVT
inertia
Unwillingness of
higher education and TVET
institutions to
cooperate
Lack of coordination and leadership within
and between
MoEYS and
MoLVT
Risks
•
Reports outlining successful
•
partnerships
and the impact
of these partnerships on training
provided
Monitoring and •
evaluation of extent and impact
of partnerships
Satisfaction
surveys
Sources and
means of verification
•
Number of TVET
service providers
cooperating with
higher education
institutions
Percentage
increase in en•
gagement from
Government to
foster partnership
between TVET
and higher educa- •
tion institutions
Verifiable indicators
•
Expected results
2 to 3
years but
sustained
over the
long run
(10 years
at least)
2013 but
sustained
over the
long run
(10 years
at least)
Time
Human Capital Implications of Future Economic Growth in Cambodia
Specific objective
Specific objective
Reorganisation
of management,
governance,
and financing of
higher education
institutions
Policy recommendations
Reform higher
education
Long-term interventions
Policy
recommendations
•
•
•
•
More equitable
higher education
system able to
allow access for all
members of Cambodian society
More efficient
management of
higher education
system
Ability to react to
changes in the
market and appropriately reform the
education system
Fill the mismatches
of skills between
graduates and
markets
Expected results
Expected results
•
•
•
•
Percentage of
recent graduates
who gain employment rapidly after
graduation
Percentage of
individuals undertaking higher
education
Percentage of
individuals in
higher education
that come from
different sectors
of society (equity)
Data on the management of higher
education by the
Government and
its partners
Verifiable indicators
Verifiable indicators
•
•
•
•
•
•
Monitoring and
evaluation
Employee and
employer surveys
Existence of
Government
policy for the
reform and
development of
the higher education system
Government
budgets
Official MoEYS
reports
Reports of
development
partners on
the education
system
Sources and means
of verification
Sources and
means of verification
•
•
Lack of commitment by the
Government for
the sustained
development of
the higher education system
Lack of vision
from development partners
Risks
Risks
MoEYS with support from development partners
Lead
Lead
10 to 15
years
Time
Time
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UNDP Discussion Paper No. 8
TITLE
143
144
UNDP Discussion Paper No. 8
Governmental
institutional
reform
Policy
recommendations
•
Government focus •
shifting to more
cooperative engagement in the
•
higher education
system
•
•
•
•
•
•
Number of education programmes
developed by
more than one
ministry
Percentage of
funds allocated
from different
ministries for
education programmes (equity)
•
•
•
•
Risks
Government
budget reports
National development plan
Monitoring reports by donors
Evaluation by
the education
sector about the
involvement of
different ministries
•
•
•
Government
•
budget expenditure review
Incorporation of
this as a priority •
of the national
development
plan
Sources and
means of verification
•
Percentage of
Government budget allocated to
higher education •
Number of recipients of scholarships/grants for
higher education
Number of recipients of indirect
educational funding
Percentage of
poorest layers of
society benefiting
from Government
education support
systems
Verifiable indicators
Increased coopera- •
tion across various
ministries
Joint initiatives
in creating new
programmes and
•
systems for the
education sector
Increased ability
to jointly develop
policy
Increased funding for the cost of
instruction, operations, investment,
and facilities and
equipment
Continued funding
for scholarships,
fellowships, and
research programmes
Indirect funding
supporting students and families
Expected results
Increased and sus- •
tained funding of
higher education
Specific objective
Competition be- •
tween ministries •
in various areas •
Overlap of
mandates and
competencies
between the
ministries
Lack of agreement by select
ministries on
methods for
cooperation
Uneven distribu- •
tion of funds
•
throughout the •
country
Lack of Government vision and
direction leading to decreased
commitment
Lead
MoEYS
MoLVT
Other relevant and
involved
ministriesLeadership
from the
executive
branch
MoEYS
MoLVT
MEF
5 to 10
years
10 to 20
years
with a
commitment to
sustain
programme
Time
Human Capital Implications of Future Economic Growth in Cambodia
Policy
recommendations
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Lack of private
sector interest
in investment in
education and
training
Lack of support
from development partners
in setting up
mechanisms and
fostering this
cooperation
•
Government
reports including outside
investments in
the education
sector
Private sector
reports
Development
partner reports
Monitoring
reports
•
Number of
privately initiated education
programmes
Number of publicprivate partnership initiatives
Number of consultations between
the public and
private sector on
education reform
Number of private
firms mobilised
under a Government mandate
Number of investments in education and training
•
•
Increasing
Government and
private sector
cooperation
Increased Government involvement
with the private
sector on education
Promotion of
public-private
partnerships
Bringing the
private sector
more deeply into
education reform
process
Government encouragement of independent private
sector initiatives
Lead
Risks
Sources and
means of verification
Verifiable indicators
Expected results
Specific objective
MoEYS
5 to 10
MoLVT
years
Private sector
Support from
development
partners
Time
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UNDP Discussion Paper No. 8
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146
UNDP Discussion Paper No. 8
•
•
•
Creation of life•
long learning vision for Cambodia
Life-long
learning
Percentage of
higher education institutions
involved in the
development of
the knowledge
economy
Percentage of
individuals undertaking higher
education
Percentage of
individuals participating in education and training
during employment
Verifiable indicators
Creation of general •
and industry-specific long-term
strategy and vision
Creation of systems to deal with
future economic
•
crises
Development of
systems to encourage on-going
•
participation in
education and
training among
the Cambodian
population
Creation of mechanisms to encourage cooperation
between private
sector, higher
education, and the
Government
Expected results
Specific objective
Policy
recommendations
•
•
•
•
Risks
•
Existence of
Government
policy to encourage life-long
learning
Sustained financial commitment
of the Government and devel- •
opment partners
Progress reports
on milestones
in the development of the education system
Monitoring
reports on the
advancement of
the higher education sector
Sources and
means of verification
Lack of willingness of the
Government
and development partners
to work towards
a knowledge
economy
Creation of a
strong teacher
training system
to ensure that
the education
system is consistently strong
and relevant
•
•
•
Lead
MoEYS
MoLVT
Development partners
10 to 15
years,
with a
commitment to
sustain
the programme
Time
Human Capital Implications of Future Economic Growth in Cambodia
Policy
recommendations
•
•
Percentage of
individuals undertaking higher
education
Percentage of
individuals participating in education and training
during employment
Percentage of
people who
become entrepreneurs and
begin developing
products around
the knowledge
economy (services)
Verifiable indicators
•
Aim to refresh
knowledge and
upgrade skills after
the end of formal
education process •
in order to sustain
employability
Meet demands
of an increasingly
knowledge-oriented world economy •
Increase the adaptability and flexibility of the Cambodian economy to
adapt to changes
in the market and
industries
Expected results
Increased focus
•
on individual
returns generated from learning
throughout their
lifetime
Specific objective
•
•
•
•
•
8 to 10
years
MoEYS
Development partners
•
•
Lack of consensus between
Government
and development partners
to move the
education sector towards a
knowledge-oriented economy
Sustained
financing
Greater success
in the completion of lower
levels of education among
the Cambodian
workforce
•
•
Employer and
employee surveys
Reports on
upgrading of
higher education sector
Data on the
development of
the knowledge
economy
Data on the
emergence
of industrial
diversification
as a result of
knowledge and
high-skill oriented products
and services
Time
Lead
Risks
Sources and
means of verification
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UNDP Discussion Paper No. 8
TITLE
147
Policy
recommendations
148
Expected results
Development of widely
recognised and adhered to standards for
all areas of education
and training development
Formal establishment
of skills quality and
training
Increasing coordination between educational institutions and
systems for adherence
to set standards
Specific objective
Increasing coordination and decreasing incompatibilities in the
standards of qualification of education
Risks
Development
of
qualification framework without coordination with the private sector
Development
of
qualification framework without insurance of skills attributed to qualification
Lack of sustained
commitment
Sources and
means of verification
Employer reports
Government reports
National statistics on
graduates from and
participation in qualification framework
Reports from education
institutions
on use and acceptance of qualification
framework standards
Verifiable indicators
Number of students
graduating with certificates in developed
qualification
framework
Number of institutions
adhering to qualification framework
Number of institutions
and teachers which
meet
accreditation
standards
Percentage of employers who find their employees’ skills match
the qualification standards
•
•
•
•
Lead
MoEYS
MoLVT
Educational
institutions
Private sector
Time
Human Capital Implications of Future Economic Growth in Cambodia
UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
Annex 3: Statistical appendix
Figure 1 GDP Growth in Republic of Korea and Ghana over 50 Years
Source: World Bank Development Studies. 2007. Building Knowledge Economies: Advanced Strategies for Development. World Bank
Figure 2 The Four Interactive Pillars of Knowledge Economy
Source: World Bank Development Studies. 2007. Building Knowledge Economies: Advanced Strategies for Development. World Bank
Figure 3 Average Tertiary Gross Enrollment Ratios by National Income, 1965 and 1995
World Bank. 2000. Higher Education in Developing Countries: Perils and Promise. The Task Force on Higher Education and Society World
Bank.
UNDP Discussion Paper No. 8
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Human Capital Implications of Future Economic Growth in Cambodia
Figure 4 Gross Enrolment Rate across ASEAN Countries, 2001-2008
Source: UNESCO Institute for Statistics online database
Figure 5 Gross Enrolment Rate across OECD Countries, 2008
Source: UNESCO Institute for Statistics online database
150
UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
Figure 6 Asia’s Private Enrolment and Institutional Shares by Country (2001-2007)
Source: UNESCO, 2009.A new dynamic: private higher education.
Table 1
Public Expenditure and Gross Enrolment Rate for selected Asian Countries
Public expenditure per student/GDP
per capita (%)
Gross enrolment ratio (GER)
Country
1980
1997
1985
2002
China
246.2
65.3
2.9
13.2 (2001)
India
83.3
92.5
6.0
6.5 (1995)
25 (1985)
12.3
8.5
12.8
Thailand
59.7
25.4
18.1
31.92
Malaysia
140.6
53.6
5.8
28.26
Philippines
13.7
14.8
N/A
29.45 (1999)
Viet Nam
N/A
86.1
2.3
9.66 (2000)
Indonesia
Source: Indonesian Higher Education Long-term Strategy 2003-2010:10
Figure 8 Education Budget in Southeast Asian Countries (% GDP
Source: Moelidihardjo, et al, World Bank Higher Education Sector Assessment 2010:p.74
UNDP Discussion Paper No. 8
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Table 2
Asia’s Private and Public Higher Education Shares, 2001-2008*, **, ***, ****, *****
Country
Private % of total HEI
enrolment
Year
Private % of
total HEIs
Year
Private % of total
Univ. enrolment
Year
Private
% of
total
Univs.
Year
Australia
3.5
(40,000/N/A)
2008
—
—
—
—
—
—
Bangladesh
14.4
(61,108/423,236)
200304
48.6
(54/111)
200506
44.2
(91,648/207,577)
2005
71.6
(53/74)
2005
Cambodia
58.0
(56,563/97,524)
2006
64.5
(40/62)
2006
—
—
69.2
(18/26)
2004
19.9
(4,013,010/20,210,249)
2008
28.3
(640/2,263)
2008
0
2008
0
2008
59.0
(127,256/215,637)
200708
54.5
(12/22)
200708
59.4
(95,238/160,295)
200708
22.2
(2/9)
200708
India
30.7
(3,219,000/10,481,000)
200506
42.9
(7,720/17,973)
200506
—
—
—
—
Indonesia
71.0
(2,392,417/3,371,156)
2007
95.5
(2,766/2,897)
2007
—
—
89.0
(372/418)
2007
Japan
77.4
(2,924,022/3,776,623)
2007
89.6
(4,199/4,689)
2007
73.2
(2,071,642/2,828,635)
2007
76.7
(580/756)
2007
Kazakhstan
46.5
(347,100/747,100)
2004
71.8
(130/181)
2004
—
—
—
—
Kyrgyzstan
7.2
(15,800/218,300)
2004
32.7
(16/49)
2004
—
—
—
—
Lao PDR
32.4
(14,371/44,289)
200405
79.5
(31/39)
2005
—
—
—
—
Malaysia
50.9
(322,891/634,033)
2004
97.0
(559/576)
2004
7.5
2000
39.3
(11/28)
2004
Myanmar
0
(0/156)
2005
0
2005
0
2005
0
2005
Mongolia
26.0
2003
64.2
2003
8.3
2003
27.2
2003
New
Zealand
9.3
(23,763/256,468)
2006
85.6
(172/201)
2007
0
2007
0
2007
Pakistan
23.8
(103,466/435,130)
200708
46.0
(57/124)
200708
—
—
42.6
(40/94)
200708
Philippines
65.1
(1,589,866/2,438,855)
200506
89.4
(1,431/1,599)
2005
—
—
—
—
South Korea
80.0
(2,565,888/3,204,036)
2006
87.0
(280/322)
2002
78.4
(1,439,297/1,836,649)
2004
84.8
(145/171)
2004
China
Hong Kong,
China
71.9
2004
65.8
2004
66.8
2004
64.1
2004
Thailand
Taiwan
9.9
(173,007/1,750,777)
2007
46.9
(70/149)
2007
16.8
2001
28.3
2003
Viet Nam
10.4
(137,760/1,319,754)
2005
12.6
(29/230)
2005
—
—
—
—
Notes: * If we sum all the enrolment data for Asia, we get a private share of 36.4 percent, excluding countries and regions where
either private enrolments or total enrolments are not available.
** Although the data come from the most reliable sources found—usually official sources—criteria and inclusiveness both vary
greatly across countries, so comparisons should be drawn only with caution. For example, the meaning of higher education,
university, and tertiary education varies. In some databases, only accredited or at least licensed institutions are counted;
in others, the figures are more broadly inclusive. There are also differences in how to count enrolments and in many other
respects. Further details and caveats on international tables at
http://www.albany.edu/dept/eaps/prophe/data/international.html. Attention to such matters is keener in PROPHE’s in-depth
data work on individual countries. See http://www.albany.edu/dept/eaps/prophe/data/national.html.
*** Georgia, Israel, Russia, and Turkey are listed in the Europe table, though they could also be listed in Asia.
**** Although some numbers for these countries are shown by sources, they are not solid enough to place in the table,
particularly in regard to inconsistency about what is counted as higher education.
***** The main preparers of this table are Yingxia Cao, Daniel Levy, Prachayani Praphamontripong and Chunyue Zhang.
Source: International Databases, PROPHE, available online at http://www.albany.edu/dept/eaps/prophe/data/international.html.
152
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Table 3
Full Time and Part Time Tertiary Teaching Staff in Selected Asian Countries
2000 and 2007
2007
2007
Country
Total
Part-time
Total
Part-time
Cambodia
1,664
—
3,261
830
China
523,326
—
1,326,058
303,764
India
399,023
—
—
—
Indonesia
217,403
—
265,527
—
Malaysia
29,915
—
39,809
—
Philippines
93,956
—
112,941
—
Thailand
50,639
3,738
75,398
—
Viet Nam
30,309
—
53,518
—
—
—
14,209
6,118
Singapore
Note: This table provides selected country numbers for full and part-time teaching staff for years 2000 and 2007. UNESCO defines
teacher or teaching staff as persons employed full time or part time in an official capacity to guide and direct the learning experience of pupils and students, irrespective of their qualifications or delivery mechanism. This definition excludes personnel who
have no active teaching duties and persons who work occasionally or in a voluntary capacity un educational institutions.
Source: Altbach,P.G. et al. 2009. Trends in Global Higher Education: Tracking an Academic Revolution. Report Prepared for the UNESCO
2009 World Conference on Higher Education. UNESCO
Table 4
Civil Service Numbers, 2003
Category
Education
Non-education
Total
%
A
6,747
12,061
18,808
11%
B
21,713
18,203
39,916
24%
C
51,601
15,961
67,562
40%
D
4,395
27,324
31,719
19%
606
8,261
8,867
5%
85,062
81,810
166,872
100%
Other a/
Total
Source: Taliercio,R.R. Year Unknown. From a Whole of Government tio a Whole of Reform Approach?: Reforming The Cambodian Civil
Service
Table 5
ASEAN World Market Shares by Priority Sectors, 2004-2008
Share of world merchandise exports (%)
2004
2005
2006
2007
2008
Agro-based products
8.8
7.9
8.5
10.1
10.4
Automotives
1.5
1.8
2.0
2.3
2.6
Electronics
12.3
12.3
12.2
12.7
11.8
Healthcare
1.5
1.9
2.4
2.5
2.1
Textiles and apparel
4.4
3.9
3.9
4.3
4.5
Wood-based products
6.7
6.7
7.1
7.4
7.7
6.2
6.6
6.3
6.2
5.5
Total, all products
Source: United States International Trade Commission.2010. ASEAN: Regional Trends in Economic Integration, Export Competitiveness,
and Inbound Investment for Selected Industries. p.2-17
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Table 6
Cambodia and Intra-regional Trade
1998
Total
exports
(US$ b)
2007
% to Asia
% regional
exports
% intraregional
exports
0.9
52.9
0.1
0.1
China
183.7
49.0
13.9
15.9
Hong Kong, China
173.7
48.9
13.1
15.0
344.7
48.9
54.1
3.7
4.7
114.1
388.0
33.7
29.4
23.0
714.3
0.9
35.9
0.1
0.1
1.6
132.8
40.7
10.0
9.5
371.4
Cambodia
Indonesia
Japan
Korea (DPRK)
Korea (Rep.)
Total
exports
(US$ b)
% to Asia
%
regional
exports
% intraregional
exports
Total
exports
Intraregional
exports
4.1
13.1
0.1
0.0
17.8
0.8
1,218.1
38.0
32.4
25.0
23.4
19.9
63.2
9.2
11.8
7.9
11.0
59.2
3.0
3.7
9.9
11.0
46.9
19.0
18.1
7.0
11.0
41.0
0.0
0.0
6.9
8.6
48.2
9.9
9.7
12.1
14.2
Lao PDR
0.4
48.4
0.0
0.0
1.3
63.1
0.0
0.0
15.2
18.6
Malaysia
73.5
48.3
5.6
6.3
176.2
54.6
4.7
5.2
10.2
11.7
Mongolia
0.3
47.6
0.0
0.0
1.7
74.2
0.0
0.1
19.2
25.2
Myanmar
1.1
35.2
0.1
0.1
4.8
67.0
0.1
0.2
17.2
25.9
Papua New Guinea
2.4
27.4
0.2
0.1
7.4
20.7
0.2
0.1
13.6
10.1
29.5
40.6
2.2
2.1
50.5
60.8
1.3
1.7
6.1
11.0
Philippines
Singapore
109.9
48.8
8.3
9.5
299.2
63.2
8.0
10.2
11.8
15.0
Taiwan, China
110.8
43.7
8.4
8.5
244.1
65.7
6.5
8.7
9.2
14.2
Thailand
55.4
43.2
4.2
4.2
152.5
52.9
4.1
4.4
11.9
14.4
Viet Nam
9.3
55.8
0.7
0.9
48.6
41.6
1.3
1.1
20.1
16.3
Total Asia
1.322
42.9
100.0
100.0
3.754
49.2
100.0
100.0
12.3
14.0
Source: World Bank.2009.Sustaining Rapid Growth in a Challenging Environment. p. 46
154
1998-2007
annual growth
UNDP Discussion Paper No. 8
Human Capital Implications of Future Economic Growth in Cambodia
Annex 4: Boxes
Box A1
Knowledge and Growth: Empirical Evidence
Education
Recent studies of international differences in output per worker and economic growth rates have focused
on the role of human capital in economic development. Indeed, most empirical, cross-country studies of
long-term growth now include some measure of human capital. Barro (1991), using data for 98 countries
for 1960-85 and school enrolment rates at the primary and secondary levels in 1960 as proxies for initial human capital, found that enrolment rates had statistically significant positive effects on growth of per capita
real GDP. Similarly, Cohen and Soto (2001), using cross-country time-series data on educational attainment
(or average years of school completed), fond that education had statistically significant positive effects on
socio-economic growth. Hanushek and Kimko (2000) focused on the effects of educational quality on economic growth. Using international test scores as a proxy for the quality of educational systems, they found
that educational quality had a positive effect on economic growth.
Information and communications technologies
A growing body of evidence shows that ICTs contribute to a country’s overall economic growth – and not
just growth in its ICT sector. A recent study by the London Business School found that, in a typical developing country, an increase of 10 mobile phones per 100 people boosts GDP by 0.6 percentage points (cited
in “Calling Across the Divide”, The Economist, 10 March 2005). Other literature suggests ICT investment and
growth contributes to labour productivity through increases in the level of ICT investment and growth in
the sectors that produce ICTs (Zhen-Wei Qiang, Pitt and Ayers 2004). While individual firms or sectors of the
economy are not automatically made more productive and competitive by ICTs, the potential advantages
are numerous. A recent report on ICTs and economic growth in transition economies indicates strongly that
ICTs are a major contributor to productivity, profitability and growth at the level of the firm (InfoDev 2006).
Innovation
Various studies have shown that innovation and the generation of technical knowledge have substantial
positive effects on economic growth and growth in productivity. For example, Lederman and Maloney
(2003), using regressions on data panels of five-year averages between 1975 and 2000 for 53 countries,
found that a 1 percentage point increase in the ratio of total R&D expenditure to GDP increased the growth
rate of GDP by 0.78 percentage points. Cencera and van Pottelsberghe (2001) investigated the long-term
effects of various types of R&D on multifactor productivity growth, using OECD panel data for the period
1980-98.a They found that business, public and foreign R&D all had statistically significant positive effects
on productivity growth. Adams (1990), using numbers of academic scientific papers in various scientific
fields as a proxy for the stock of knowledge, found that technical knowledge contributed significantly to the
growth in total factor productivity of U.S. manufacturing industries for the period 1953-80.b
a. Cincera and can Pottelsberghe (2001) define public R&D as R&D performed by government and higher education sectors, and foreign R&D as business R&D performed in other 15 OECD countries.
b. Adams (1990) used worldwide annual counts of publications in nine sciences: agriculture, biology, chemistry, computer science, engineering, geology, mathematics and statistics, medicine, and physics.
Source: World Bank Development Studies. 2007. Building Knowledge Economies: Advanced Strategies for Development. World
Bank. p. 27
Box A2
Key aspects of General and Vocational Education
General Education
Vocational Education
Creates ‘general human capital’
Creates ‘specific human capital’
Advantage: General education provides labour force Advantage: Vocational education provides specific jobwith a range of knowledge with workers able to easily relevant skills, which can make the worker more readchange tasks or even type of work
ily suitable for a given job and would make them more
productive.
More flexible, thus suitable for flexible labour force More specified, thus difficult for labour force to get jobs
because it is portable across one’s life and from job to out of its main profession.
job.
Source: J. B. G. 2002, “Vocational Education and Training In Asia”, in Keeves, J.P. and R. Watanabe eds.) The Handbook on Educational Research in the Asia Pacific Region. Kluwer Academic Publishers.
UNDP Discussion Paper No. 8
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Box A3
Australian Government Productivity Commission
Below is information on the Australian Government Productivity Commission, an independent research and
advisory body undertaking studies in a range of different areas to increase the ability of the Australian government to make informed policy decisions. This is an excellent example of the kind of increased human capacity skills that Cambodia will need to tackle major policy problems in the future. By developing research and
analysis capabilities on the same line as this Commission, the RGC will be able to more deftly deal with not just
education reform, but many of the wicked policy problems it will face in the coming years.
The Commission’s Role
The Productivity Commission is the Australian Government’s independent research and advisory body on a
range of economic, social and environmental issues affecting the welfare of Australians. Its role, expressed most
simply, is to help governments make better policies, in the long-term interest of the Australian community. The
Productivity Commission was created as an independent authority by an Act of Parliament in 1998, to replace
the Industry Commission, Bureau of Industry Economics and the Economic Planning Advisory Commission.
The Commission’s Four Main Output Streams
1. Public inquiries & research studies requested by the government
2. Performance monitoring & benchmarking and other services to government bodies
3. Competitive neutrality complaints
4. Supporting research & annual reporting on productivity, industry assistance and regulation
•
The Productivity Commission is an advisory body. It does not administer government programmes or
exercise executive power. Its contribution hinges on the value of the independent advice and information it provides to governments, and on the educative functions of its public processes.
•
The Commission is an Australian Government agency, located within the Treasury portfolio. However
its activities cover all levels of government and encompass all sectors of the economy, as well as social
and environmental issues.
•
The core function of the Commission is to conduct public inquiries on key policy or regulatory issues
bearing on Australia’s economic performance and community wellbeing. In addition, the Commission undertakes a variety of research at the request of government and to support its annual reporting, performance monitoring and other responsibilities.
•
It has a key role in benchmarking and reviewing regulation, as well as advising on the competitive
neutrality of government business activities.
The Commission is independent
The Commission operates under the powers, protection and guidance of its own legislation. Its independence
is formally exercised under the Productivity Commission Act through the Chairman, Deputy Chairman and
Commissioners, who are appointed by the Governor-General for fixed periods. The Productivity Commission
has its own budgetary allocation and permanent staff, operating at arm’s length from other government agencies. While the Government largely determines its work program, the Commission’s findings and recommendations are based on its own analysis and judgments. The Commission reports formally through the Treasurer to
the Australian Parliament, where its inquiry reports are tabled. However, the statutory requirement to promote
public understanding of policy issues with a view of improving Australia’s living standards means that its reports are also directed at the wider community.
Its processes are transparent
The Commission’s advice to government, and the information on which it is based, are all open to public scrutiny. Its processes provide for extensive public input through hearings, workshops and other consultative forums, and through the release of draft reports and preliminary findings.
It adopts a community-wide perspective
The Commission is obliged under its statutory guidelines to take a broad view, encompassing the interests
of the economy and community as a whole, rather than just particular industries or groups. Environmental,
regional and social dimensions of its work are also carefully considered, informed by public consultation and
the Commission’s own research capability.
Source: Australian Government Productivity Commission: A Quick Guide to the Productivity Commission
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UNDP Discussion Paper No. 8
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Box A4
Civil Service Structure in Cambodia
Four categories civil servants:
Structure/Composition
The Cambodian Civil Service is defined
as a set of civil servants, who are
located in both main and regional
office, as indicated under the Common
Statute of Civil Servants. The State
Secretariat for Civil Service (SSCS) manages all of the civil servants, excluding
military, police force, and judges of the
juridical order and civil servants of the
legislative order.The total amount of
civil servant personnel in Cambodia
reached to 166,381 in 2003, of which
sixty nine percent (69%) are male and
thirty one percent (31%) are female
(2000). The personnel within each age
bracket are as follows:
•
•
•
•
•
•
20 and below: 0.3%
21-30: 32.5%
31-40: 29.7%
41-50: 27%
51-60: 11%
61-70: 0.03% (2000)
There are two levels in the civil service
structure, the Main Office and the Regional Office. Those considered as main
offices have Ministries, State Secretariats, and Institutions such as Authorities,
Committees, and Councils, etc. Those
considered as regional offices include
the provincial and municipal department and district office. There are 25
ministries and two state secretariats
in the Royal Government. There are
prescribed and designated uniforms for
civil servants.
Category A:
Administrator
(Leader, Decision
Maker) sub-divided to 3 grades:
Category B: Mid
Level Civil Servant
(Leadership Assistant) sub-divided
to 3 grades:
Category C:
Secretary or
Skilled Operators (Executive)
sub-divided to 3
grades:
Category D:
Administrative Agents,
sub-divided to 3
grades:
Grade A1:
Chief Administrator
(has 6 steps A1-6
to A1-1) Position:
Secretary General,
Deputy Secretary
General, Director
General, General
Inspector, Provincial and Municipal
Governor.
Grade B1:
Chief Mid Level
Civil Servant (has
6 steps from B1-6
to B1-3) Position:
Central Head Office, Vice Chief of
Local Department,
Deputy Chief of
District.
Grade C1:
Chief Secretary
(has 6 steps from
C1-6 to C1-1)
Position: Deputy
Head Office of
District.
Grade D1: Chief
Administration
Agent (has 6
steps from D1-6
to D1-1) Position:
High Skill Worker.
Grade A2:
Principle administrator (has 10 steps
from A2-10 to A2-1)
Position: Deputy
Director General,
Deputy General
Inspector, Director
of Central Department Provincial
and Municipal Vice
Governor, Chief of
District, Inspector.
Grade B2:
Principal Mid-Level
Civil Servant (has
30 steps from
B2-10 to B2-1)
Position: Central
Deputy Head
Office, Provincial
Head Office.
Grade C2:
Principal Secretary (has 10 steps
from C2-10 to
C2-1)Position:
Communal Clerk.
Grade D2:
Principal Administrative Agent
(has 10 steps from
D2-10 to D2-1)
Position: Mid-Skill
Worker.
Grade A3:
Administrator (has
14 steps from A3-14
to A3-1) Position:
Deputy Director of
Central Department, Chief of
Local Department,
Bachelor, Master
and Doctor without
position.
Grade B3:
Mid Level Civil Servant (has 14 steps
from B3-14 to B3-1)
Position: Provincial
Deputy Head Office, District Head
Office.
Grade C3:
Secretary (has 14
steps from C3-14
to C3-1)
Grade D3:
Administrative
Agent (has 14
steps from D3-14
to D3-1) Position:
Low Skill Worker.
With the exception of the Ministry of
Royal Palace, Ministry of Foreign Affair
and International Cooperation, Ministry
of National Defense, Ministry of Justice,
Council of Ministers, Ministry of Interior, State Secretariat for Civil Services
and State Secretariat for Civil Aviation,
each ministry has its own provincial
and municipal department, with each
department having its own districts.
Source: UNITED NATIONS PUBLIC ADMINISTRATION NETWORK – NEW YORK EASTERN REGIONAL ORGANIZATION FOR PUBLIC ADMINISTRATION.2004. Civil Service System in the ASEAN Region: A Comparative Perspective.
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Box A5
Civil Service Requirement for Employment Cambodia
1. There are basic qualifications for employment in Government that are common to all positions.
These include:
a. Must be a Cambodian citizen;
b. Must be at least 18 years but not more than 25 year old. However, exceptions shall be
made for:
•
Candidates with a diploma of higher education, in which case the age limit shall be: candidates having
studied a year or more of higher education without having obtained a final diploma, in which case the age
limit of 25 years shall be pushed back to a length of time equal to their studies without exceeding the age
limit of 30 years;
•
Candidates having effectively accomplished their service in the military, in which case the age limit shall
be pushed back to a length of time equal to their service in the army; and
•
The ability of the Royal Government to lift, in case of necessity, by Anukret (Sub-decree) all restrictions regarding a candidate’s age in order to satisfy the needs found to be priorities and in the national interest;
c. Must not be deprived of his/her civil rights, civic and political;
d. Must not have been condemned for a crime or attempted offence of good moral conduct, honor or integrity;
e. Must satisfy the condition of physical aptitude for the exercise of the function as required by guidelines and
applicable regulations;
f. Candidates belonging to ethnic minorities, coming from remote regions, as well as women, may benefit from
facilities or prioritised measures of recruitment; and
g. Must satisfy the aptitude conditions required by the particular statue governing his/her body.
2. The unique requirements for specific positions are:
Category A: It requires at least Bachelor Degree;
Category B: It requires at least Higher Vocational Certificate (High School Education Diploma+ 2)
Category C: It requires at least High School Education Diploma.
Category D: No Degree requirement for this category.
Through the proposal of the ministry concerned, the SSCS coordinates and makes an annual personnel plan
by maintaining the quantity of personnel in order to request the Royal Government for its decision. SSCS then
informs the ministry concerned to prepare the competitive examination.
3. The following is the standard recruitment procedure:
Before the examination date, a Board Recruitment Commission is created in the presence of the representatives of SSCS. A written examination will be conducted covering the following areas:
a. Main Subject (Law, IT, Finance, Management...)
b. General Knowledge
c. Language (English)
Source: UNITED NATIONS PUBLIC ADMINISTRATION NETWORK – NEW YORK EASTERN REGIONAL ORGANIZATION FOR PUBLIC ADMINISTRATION.2004. Civil Service System in the ASEAN Region: A Comparative Perspective.
158
UNDP Discussion Paper No. 8
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Box A6
Harnessing ASEAN Partnerships
The global financial crisis which started in 2007 affected practically every country. Some could sustain the
economic shock and deal with it astutely, but there were also those which could not. Cambodia was part of the
latter group. Given this, a way needs to be found to help it re-establish its economic development plans which
suffered significantly in the crisis.
One of the ways out of this quagmire is to foster greater cooperation and develop closer and more proactive
ties with the member countries of ASEAN. It must be remembered that Cambodia has come a long way from
its turbulent Khmer Rouge years and a sort of political normality and economic advancement had begun to
exist. It is therefore imperative that every chance and opportunity must be afforded to help and support a
neighbor and a member country of the ASEAN region. Lessons from the EU market integration, which has been
very successful, tells us that regional cooperation and integration within the ASEAN region could yield many
dividends.
The ASEAN member countries could benefit a great deal. Some advantages would include a freer flow of goods,
services and investments, increased competition, better utilisation of comparative advantage for efficient usage of resources, reduced trade tariff for intraregional trade, equitable economic development and an enlarged
market base. On trade effect, Rosabel B. Guerrero states: “in which economic welfare increases as resources previously engaged in costly domestic production are efficiently reallocated to the direction of a country’s comparative advantage and by that, will generate greater opportunities”.13 An obvious point to make: the regional
market is also viewed and treated as a trade opportunity by other countries outside the ASEAN region.
It is also relevant to note the role of ASEAN regarding the goal of free movement of people by 2015 and the
more recent focus of ASEAN members on human resources and skill development across the region. During the
ASEAN Leaders’ Statement on Human Resources and Skills Development for Economic Recovery and Sustainable Growth in October 2010, leaders affirmed the need to:
•
Strengthen cooperation on education to achieve an ASEAN Caring and Sharing Community, which recognises the role of education for economic development in developing national skills frameworks as an
incremental step towards an ASEAN skills recognition framework;
•
Recognise the importance of human resources and skills development in raising productivity and accelerating economic recovery and sustainable growth in the light of the recent global economic crisis;
•
Recognise that the major human resources challenges that ASEAN has been facing in sustaining economic
recovery and growth will include enhancing workforce competitiveness, improving workforce skills, rebuilding employment and accelerating productivity
All these objectives are leading to the goals of: (i) fostering technical cooperation and capacity-building activities in ASEAN, (ii) promoting tripartite and public-private sector cooperation, (iii) enhancing the quality and
skills of workers in all ASEAN Member States and (iv) promoting lifelong learning
Several agreements that have moved the region closer into its 2015 ASEAN Economic Community vision:
1. The ASEAN+6 can import and export almost all goods across their borders, while more than 99 percent of
tariff lines have been reduced to 0-5 percent for Cambodia along with Lao PDR, Myanmar, and Vietnam
2. The ASEAN-China Free Trade Area was also fully implemented in which tariffs on at least 90 percent of
ASEAN-China bilateral trade have been eliminated
3. Under the ASEAN–Korea Free Trade Area 90 percent of products on ASEAN-Korea bilateral trade have also
been eliminated
4. The ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) came into being
5. ASEAN-India Trade in Goods Agreement came into force which will set into motion the creation of an
ASEAN-India Free Trade Area
Challenges to achieving full economic integration:
1. Due to the non-invasive structure of the ASEAN region, implementation of trade agreements plus other
integrated projects are difficult to coordinate.
2. Limited integration and many trans-border obstacles among ASEAN member countries make it difficult to
increase investor confidence.
3. ASEAN markets are still small and fragmented in comparison with the Chinese market, the EU market and
others.
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Economic values for Cambodia as a member region of ASEAN:
1. The ASEAN Integration System of Preference (AISP), the Special Tariff (SPT) with China, the Greater System
of Preference (GS) with Japan and the republic of Korea.
2. ASEAN has implemented joint activities with Russia in the areas of science and technology (S&T), tourism,
SMEs and education.
3. ASEAN is in the middle of an emerging regional architecture in East Asia: the ASEAN+3 and the East Asia
Summit (EAS) processes are looking at the possibility of integrating their respective participating countries for an FTA, i.e. East Asia Free Trade Area (EAFTA) for the ASEAN+3 and the Comprehensive Economic
Partnership for East Asia (CEPEA) for the EAS participating countries.14
4. Given that trade is a key driver for economic growth, the expansion of intra-regional trade driven by ASEAN’s commitment to establish the ASEAN Community by 2015 provides an important opportunity for
Member Countries to benefit from regional integration and strengthen resilience against future external
shocks (ILO, 2010).
The Royal Cambodian government has stipulated several measures to accelerate the country’s integration with
the regional market by committing to:
1. Engage in discussions/negotiations to become a member of Asia-Pacific Economic Cooperation (APEC)
forum, and continue to participate in building the ASEAN community and network of East Asia.
2. Actively promote the creation of ASEAN + China, ASEAN + Korea, ASEAN + Australia-New Zealand as well
as establishing ASEAN + China and ASEAN + Korea Centres.
3. Actively participate in implementing the Great Mekong Sub-Region, Ayeyawada-Chao Phraya Mekong
Economic Cooperation Strategy (ACMECS) focusing on the cross-border investment development, crossborder transportation, and investment along the borders.
4. Actively participate in the development of the economic corridor through the Economic Corridors Forum
of the Great Mekong Sub-Region with the active involvement of Provincial Governors Forum, and ensure
the rehabilitation and construction of transport infrastructure needed to support the development of the
Greater Mekong Sub-region economic corridors to promote the development of the remote areas.
Source: UNITED NATIONS PUBLIC ADMINISTRATION NETWORK – NEW YORK EASTERN REGIONAL ORGANIZATION
FOR PUBLIC ADMINISTRATION.2004. Civil Service System in the ASEAN Region: A Comparative Perspective.
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Human Capital Implications of Future Economic Growth in Cambodia
Box A7
Timeline of important milestone in ASEAN Economic Integration
1967
Bangkok Declaration
ASEAN founded by Indonesia, Malaysia, Philippines, Singapore and Thailand.
1977
Agreement on ASEAN
preferential trading
arrangements
One of the earliest ASEAN agreements to carry some local obligation. Members agreed to apply preferential tariff rates based on a margin of preference over MFN rates on basic commodities, products of ASEAN industrial
projects and others of interest.
1984
Brunei joins ASEAN
1987
Enhanced preferential
trading arrangements
Improved the preferential trading arrangements by, e.g., reducing exclusion
lists, further reducing tariffs, and relaxing ASEAN content requirements in
the rules of origin.
1987
Investment Guarantee
Agreement (IGA)
The IGA provides investment protections for FDI between ASEAN member
countries, including compensation in case of expropriation; guarantees of
an investor’s right to repatriate earnings, subject to local laws; and provision
for arbitration between parties in case of disputes.
1 January 1993
AFTA implemented
Members agreed to establish the ASEAN Free Trade Area (AFTA) and a
Common Effective Preferential Tariff (CEPT) scheme, where 99 percent of
product categories will have intra-ASEAN tariff rates reduced to 0-5 percent.
1995
Viet Nam joins ASEAN
1995
ASEAN Framework
agreement on Services
(AFAS)
Based closely on the General Agreement on Trade in Services (GATS). Aims
to eliminate restrictions on trade in services, enhance intra-ASEAN services
cooperation, and liberalise services trade based on the GATS-plus principle.
Mandates successive negotiations to progressively liberalise services trade.
1996
ASEAN Industrial
Cooperation Scheme
(AICO)
Replaced earlier ASEAN industry project cooperation programmes.
Promotes joint manufacturing industrial activities between ASEAN-based
companies. AICO products enjoy preferential tariff rates of 0-5 percent.
1997
Myanmar and Lao PDR
join ASEAN
1997
ASEAN Vision 2020
Laid out a vision of ASEAN in 2020, including closer economic integration
and a commitment to create “a stable, prosperous and highly competitive
ASEAN Economic Region in which there is a free flow of goods, services and
investments, a freer flow of capital, equitable economic development and
reduced poverty and socio-economic disparities”.
1998
Framework Agreement
on the ASEAN Investment Area (AIA)
Aims to ensure a free flow of investment (in manufacturing, fisheries, forestry, mining, agriculture and services) by 2020. Reservations made by members are scheduled to be eliminated in 2015 for ASEAN investors and 2020
for non-ASEAN investors. The ASEAN-6 countries (original ASEAN members
and Brunei) agreed to accelerate this process by eliminating reservations in
manufacturing for ASEAN investors by 2003 and for all investors by 2010.
1998
Hanoi Plan of Action
First of a series of action plans to help implement the ASEAN Vision 2020. It
lays out steps to promote economic integration over the period 1999-2004.
1999
Cambodia joins ASEAN
2000
Initiative on ASEAN
Integration (IAI)
Goal is to address the development gaps between member states through
soft infrastructure projects (such as training, technical studies, and capacity
building) and physical transport and communication infrastructure projects, and to mobilise funding from international financial institutions and
developed countries for support. About 258 projects have been completed
to date.
October 2003
Declaration of ASEAN
Concord II: ASEAN
Community by 2020
(9th ASEAN Summit or
Bali Concord II)
Agreed to establish an ASEAN Community by 2020 that consists of three pillars or communities based on political and security cooperation, economic
cooperation, and socio-cultural cooperation. The ASEAN Economic Community (AEC) is the end goal of the economic integration process described
in the ASEAN vision. Eleven priority sectors are identified for accelerated
integration.
November 2004
Vientiane Action Plan
Successor to the Hanoi Plan of Action to help realise the ASEAN Vision and
the ASEAN Community. It covers the period 2004-2010.
November 2004
ASEAN Framework
Agreement for the
Integration of Priority
Sectors
Includes roadmaps for each priority sector that identify measures to be
implemented and timelines for their implementation.
January 2007
ASEAN Community by
2015
Leaders at the 12th ASEAN Summit agreed to accelerate the establishment
of an ASEAN Community. The target date is now 2015.
UNDP Discussion Paper No. 8
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TITLE
Box A8
Timeline of important milestone in ASEAN Economic Integration (cont.)
November 2007
ASEAN Economic Community Blueprint
Leaders at the 13th ASEAN Summit adopted the ASEAN Economic Blueprint,
which provides the framework for achieving the AEC by 2015.
15 December 2008
ASEAN Charter implemented
Established the legal and institutional framework for ASEAN
26 February 2009
ASEAN Comprehensive
Investment Agreement
(ACIA) signed
ACIA adds to investor protections under the AIA in several ways: includes
comprehensive investment liberalisation and protection provisions,
including prohibition of performance requirements; includes an investorstate dispute settlement process; and extends benefits to foreign-owned,
ASEAN-based investors. The ACIA Framework is a ‘negative list’ framework:
each member state also compiles a list of reservations, or exclusions, to the
agreement.
March 2009
Roadmap for the
ASEAN Community,
2009-2015
Consists of the Economic Community Blueprint (approved in 2007), the
Political-Security Community Blueprint, the Socio-Cultural Community
Blueprint, and the second IAI work plan. Replaces the Vientiane Action
Programme.
17 May 2010
ASEAN Trade in Goods
Agreement (ATIGA)
enters into force
ATIGA builds on existing initiatives related to trade in goods (e.g. CEPT-AFTA, non-tariff measures, customs, ASEAN single window, mutual recognition
agreements, e-ASEAN, integration of priority sectors, etc.). Goal is to achieve
the free flow of goods to establish a single market and production base,
making it possible to realise the AEC by 2015.
Source: USITC. ASEAN Regional Trends in Economic Integration, Export, Competitiveness, and Inbound Investment for Selected Industry.
2010:2.2-2.3.
Human Capital Implications of Future Economic Growth in Cambodia
ENDNOTES
1. The report continues as follows: “This poses a serious challenge to the developing world. Since the 1980s many national governments and international donors have assigned higher education a relatively low priority. Narrow – and in our view misleading
– economic analysis has contributed to the view that public investment in universities and colleges brings meagre returns
compared to investment in primary and secondary schools, and that higher education magnifies income inequality…As a result higher education systems in developing countries are in great strain. They are chronically underfunded but face escalating demand – approximately half of today’s higher education students live in the developing world. Faculty are often under
qualified, lack motivation and are poorly rewarded. Students are poorly taught and curricula underdeveloped. Developed
countries meanwhile are constantly raising the stakes. Quite simply, many developing countries will need to work hard just
to maintain their position, let alone catch up.” (ibid, p. 10).
2. See Figure 1in Appendix.
3. World Bank 2007a, p. 13, table 1.2.
4. For an interesting debate on the issue between the World Bank’s Chief Economist Justin Lin and Cambridge economist Ha-Joon
Chang, see Development Policy Review (2009),27(5) “Should Industrial Policy in Developing Countries Conform to Comparative Advantage or Defy it? A Debate between Justin Lin and Ha-Joon Chang”. Development Policy Review (2009),27(5):483502.
5. For an excellent review of the impact of human capital on economic growth, see Wilson and Briscoe 2004. For a
discussion in the context of the US education system, see Aghion et al 2009. L. Boustan, C. Hoxby and J. Venderbussche 2009. “The Causal Impact of Education on Economic Growth: Evidence from the United States”.
Apart from the analyses of the impact of human capital and education on growth in both Wilson and Briscoe and in Aghion
et al, they both highlight well known problems in measuring human capital both within and across countries. These data
problems, as well as the problem of determining quality equivalence across countries and regions, make it difficult to derive
reliable predictions on the impact of investment in education on economic growth. At the same time, there is broad agreement on the fact that an increase in human capital does raise labour productivity, employee income and social mobility.
6. Mining and utilities is the third largest source of employment generation, but is not mentioned in the study produced by the
World Bank (2010e2010c) and has not been made available for this graph.
7. As part of a strategy to diversify reliance on small and medium enterprises, and reduce poverty, the government of Cambodia
established an SME Development Strategic Framework, adopted in 2005. This framework (Strategy 2015) lays out consistent
strategic directions for planning and executing targeted interventions to promote the development of the SME sector.
8. This section is limited due to the scarcity of data and information available.
9. When a county begins developing economically, its income inequality worsens. But after a few decades, when the rich begin
investing more in the economy and wealth begin to trickle down, income equalises and people are more wealthy then they
would otherwise have been.
10. For more details on the EU-Cambodia relationships, see the EU website: http://ec.europa.eu/delegations/cambodia/eu_cambodia/index_en.htm.
11. Many different types of training can be provided: on the job training, informal training, classroom training, internal training
courses, external training, on the job coaching, life coaching, mentoring, training assignments and tasks, skill training, product training, technical training, behavioural training, attitude training and development, accredited training and learning,
distance learning, vocational training – which can all be developed according to individual training needs, sectors, people’s
profiles and people’s orientation. Ideas relating to training methods to foster this type of self development around training
and learning include: assessing and agreeing on training needs by conducting some training needs analysis; creating training
or development specifications, breaking down training and learning into the most important elements; considering learning
styles and personality, which could affect what type of training an individual will find easiest and most effective; planning
training and evaluation, by considering the evaluation training effectiveness, before and after measurements; and designing
materials and methods and delivering training, by considering modern and innovative methods.
12. As was the case of several former Tiger Economies during the Asian Financial Crisis, Indonesia was the worst affected in this
regard since political implosion accompanied economic collapse.
13. For more details on regional integration see Rosabel B. Guerrero.Regional integration: the ASEAN vision in 2020.
14. As consolidation of ASEAN’s Plus One FTAs begins, priority is being given to rules of origin, tariff nomenclature, customs procedures and economic cooperation. ASEAN Annual Report 2009-2010: Bridging Markets, Connecting People. p. 25.
UNDP Discussion Paper No. 8
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TITLE
United Nations Development Programme
No. 53, Pastuer Street
P.O. Box 877
Phnom Penh
Cambodia
www.un.org.kh/undp
AUGUST 2011
Cambodia